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Strategic pricing of commodities

Author

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  • Jörnsten, Kurt

    () (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)

  • Ubøe, Jan

    () (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)

Abstract

In this paper we will consider a setting where a large number of agents are trading commodity bundles. Assuming that agents of the same type have a certain utility attached to each transaction, we construct a statistical equilibrium which in turn implies prices on the different commodities. Our basic question is then the following: Assume that some commodities come out with prices that are socially unacceptable. Is it possible to change these prices systematically if a new type of agents is paid to enter the market? In the paper we will consider explicit examples where this can be done.

Suggested Citation

  • Jörnsten, Kurt & Ubøe, Jan, 2006. "Strategic pricing of commodities," Discussion Papers 2006/19, Norwegian School of Economics, Department of Business and Management Science.
  • Handle: RePEc:hhs:nhhfms:2006_019
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    File URL: http://hdl.handle.net/11250/163876
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    References listed on IDEAS

    as
    1. Jörnsten, Kurt & Ubøe, Jan, 2010. "Quantification of preferences in markets," Journal of Mathematical Economics, Elsevier, vol. 46(4), pages 453-466, July.
    2. Foley Duncan K., 1994. "A Statistical Equilibrium Theory of Markets," Journal of Economic Theory, Elsevier, vol. 62(2), pages 321-345, April.
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    More about this item

    Keywords

    Agent preferences; efficient markets; statistical equilibria; commodity prices; arbitrageurs;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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