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A note on price-taking and price-making behaviours in pure exchange economies

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  • Ludovic Alexandre Julien
  • Fabrice Tricou

Abstract

This paper explores the rationale of price-taking and price-making behaviours in the context of Walrasian and Cournotian pure exchange economies. Beside the influence of the number of agents, we underline the role of the structure of preferences in the definition and in the working of market power. Through three equilibrium variations of the same basic economy, we obtain several results about price manipulation, about asymptotic identifications for large economies and for degenerate preferences, and about welfare comparisons. Perfect competition does not only correspond to the case of large economies, but may also concern economies where fundamental market powers are more or less equivalent.

Suggested Citation

  • Ludovic Alexandre Julien & Fabrice Tricou, 2006. "A note on price-taking and price-making behaviours in pure exchange economies," EconomiX Working Papers 2006-3, University of Paris Nanterre, EconomiX.
  • Handle: RePEc:drm:wpaper:2006-3
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    File URL: http://economix.fr/pdf/dt/2006/WP_EcoX_2006-3.pdf
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    References listed on IDEAS

    as
    1. Shapley, Lloyd S & Shubik, Martin, 1977. "Trade Using One Commodity as a Means of Payment," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 937-968, October.
    2. repec:cor:louvrp:-964 is not listed on IDEAS
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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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