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The Strategic Robustness of Mark-up Equilibria

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Listed:
  • David M. Newbery
  • Thomas Greve

Abstract

This paper is an extension of the paper 'The Robustness of Agent-Based Models of Electricity Wholesale Markets', EPRG1213 which was motivated by the problem of analysing market power in liberalised electricity markets. That paper examined two particular forms of agent-based models commonly used in electricity market modelling, and showed that while these mark-up equilibria are robust against Nash deviations. This paper extends the earlier results to explain why these equilibria are robust to single firm Nash Cournot deviations but shows they are vulnerable to more sophisticated deviations.

Suggested Citation

  • David M. Newbery & Thomas Greve, 2013. "The Strategic Robustness of Mark-up Equilibria," Cambridge Working Papers in Economics 1341, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:1341
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    References listed on IDEAS

    as
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    More about this item

    Keywords

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    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • 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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