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Competition and Regulation Via Supply and Demand Functions in Oligopolistic-Oligopsonistic Markets

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  • Bulut, Harun
  • Koray, Semih

Abstract

In this study, we regard the oligopolistic-oligopsonistic markets within the framework of a "double auction" in which both buyers and sellers make bids. To this end, we introduce games where declarations of supply and demand functions (which need not be true) are treated as strategic variables of producers and consumers, respectively, rather than just as "binding commitments" on the part of these parties. Existence of symmetric equilibria of each of these games is established. Most of them are shown to be unique. The equilibrium outcomes of these are compared with the standard Cournot outcome as well as among themselves regarding the market price, total quantity produced, individual consumer's surplus, individual firms' profit and social welfare they lead to. To allow the consumers to behave strategically along with the producers, naturally makes the former better off and the latter worse off, while the net effect of this on total social welfare turns out to be case-contingent.

Suggested Citation

  • Bulut, Harun & Koray, Semih, 2008. "Competition and Regulation Via Supply and Demand Functions in Oligopolistic-Oligopsonistic Markets," Staff General Research Papers Archive 12930, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:12930
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    1. Richard Engelbrecht-Wiggans & Charles M. Kahn, 1998. "Multi-unit auctions with uniform prices," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 12(2), pages 227-258.
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    Cited by:

    1. Bulut, Harun, 2016. "Economic Design for the Supply Side of Agricultural Insurance Markets," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236008, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    buyer power; demand function equilibria; double auction; oligopoly; oligopsony; supply function equilibria.;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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