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Multiproduct trading with a common agent under complete information: Existence and characterization of Nash equilibrium

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  • Arribas, I.
  • Urbano, A.

Abstract

This paper focuses on oligopolistic markets in which indivisible goods are sold by multiproduct firms to a continuum of homogeneous buyers, with measure normalized to one, who have preferences over bundles of products. By analyzing a kind of extended contract schedule (mixed bundling prices), the paper shows that pure strategy efficient equilibria always exist in such settings. While inefficient equilibria may exist, this can be ruled out by refining the equilibrium correspondence using the concept of subgame perfect Strong equilibrium. In addition, the paper shows that each principal's set of equilibrium contracts of minimum cardinality may contain at least three offers. When the social surplus function is monotone and unit costs are constant, only two offers are required at the equilibrium outcome.

Suggested Citation

  • Arribas, I. & Urbano, A., 2017. "Multiproduct trading with a common agent under complete information: Existence and characterization of Nash equilibrium," Journal of Economic Theory, Elsevier, vol. 167(C), pages 14-38.
  • Handle: RePEc:eee:jetheo:v:167:y:2017:i:c:p:14-38
    DOI: 10.1016/j.jet.2016.10.004
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    References listed on IDEAS

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    Cited by:

    1. Iván Arribas & Amparo Urbano, 2018. "Identification of efficient equilibria in multiproduct trading with indivisibilities and non-monotonicity," Discussion Papers in Economic Behaviour 0318, University of Valencia, ERI-CES.

    More about this item

    Keywords

    Multiproduct price competition; Delegated agency games; Mixed bundling prices; Subgame perfect Nash equilibrium; Strong equilibrium;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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