Non-manipulability in Walrasian cost games Marta Faias (1), Emma Moreno-García (1)(2), Mário Rui Páscoa (2) (1) Faculdade de Economia, Universidade Nova de Lisboa, Travessa Estevao Pinto, 1099-032 Lisboa, Portugal (e-mail: firstname.lastname@example.org; email@example.com) (2) Departamento de Economía e Historia Económica, Facultad de Economía y Empresa, Universidad de Salamanca, Edificio F.E.S., Campus Miguel de Unamuno, 37008 Salamanca, Spain (e-mail: firstname.lastname@example.org) Received: 24 December 1999 / Accepted: 18 October 2001 JEL classification: D41, D51 Key words: Perfect competition, monopolistic power, Walrasian equilibrium, thick markets
In this paper, we propose a perfect competition test which checks whether arbitrarily small coalitions of firms, which behave strategically on costs, are able to manipulate prices in their own benefit. We apply this test to economies with a continuum of differentiated producers. We show that, under thickness conditions on preferences, implying a high degree of substitutability among commodities, there is no monopolistic power neither in economies with constant average costs nor in economies with increasing returns. We also give an example of thin markets where monopolistic power prevails.
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Volume (Year): 7 (2002)
Issue (Month): 1 ()
|Note:||Received: 24 December 1999 / Accepted: 18 October 2001|
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