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The strategic Marshallian cross

  • Alex Dickson

    ()

    (Keele University, Centre for Economic Research and School of Economic and Management Studies)

  • Roger Hartley

    (Department of Economics, University of Manchester)

We prove existence and uniqueness of non-autarkic equilibria in bilateral oligopoly assuming only that preferences are binormal and satisfy a weakened version of gross substitutes. We permit complete heterogeneity of preferences and our analysis exploits the fact that payoffs depend only on own strategy and two universal aggregates. This allows us to define strategic versions of supply and demand curves such that non-autarkic Nash equilibria are in 1-1 correspondence with intersections of these curves. The same approach can be used to establish comparative statics under the assumptions above. As examples, we focus on adding players and changing endowments. This competitive approach also allows us to conclude that much of conventional Marshallian analysis is robust to strategic manipulation.

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File URL: http://www.keele.ac.uk/depts/ec/wpapers/kerp0713.pdf
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Paper provided by Centre for Economic Research, Keele University in its series Keele Economics Research Papers with number KERP 2007/13.

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Length: 28 pages
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:kee:kerpuk:2007/13
Note: This is the revised version of an earlier paper, first circulated as Keele Economics Research Paper 04/07 and University of Manchester Economics Discussion Paper 0523, under different titles.
Contact details of provider: Postal: Department of Economics, University of Keele, Keele, Staffordshire, ST5 5BG - United Kingdom
Phone: +44 (0)1782 584581
Fax: +44 (0)1782 717577
Web page: http://www.keele.ac.uk/depts/ec/cer/
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Order Information: Postal: Centre for Economic Research, Research Institute for Public Policy and Management, Keele University, Staffordshire ST5 5BG - United Kingdom
Web: http://www.keele.ac.uk/depts/ec/cer/pubs_kerps.htm Email:


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  1. Richard Cornes & Roger Hartley, 2002. "Asymmetric Contests with General Technologies," Keele Economics Research Papers KERP 2002/22, Centre for Economic Research, Keele University.
  2. 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 937-68, October.
  3. Vives, Xavier, 1987. "Small Income Effects: A Marshallian Theory of Consumer Surplus and Downward Sloping Demand," Review of Economic Studies, Wiley Blackwell, vol. 54(1), pages 87-103, January.
  4. Novshek, William, 1985. "On the Existence of Cournot Equilibrium," Review of Economic Studies, Wiley Blackwell, vol. 52(1), pages 85-98, January.
  5. Rabah Amir & Siddhartha Sahi & Martin Shubik, 1986. "A Strategic Market Game with Complete Markets," Cowles Foundation Discussion Papers 814R, Cowles Foundation for Research in Economics, Yale University, revised Sep 1987.
  6. GABSZEWICZ, Jean & MICHEL, Philippe, 1992. "Oligopoly equilibria in exchange economies," CORE Discussion Papers 1992047, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Richard Cornes & Roger Hartley, 2002. "Joint Production Games with Mixed Sharing Rules," Game Theory and Information 0211003, EconWPA.
  8. Bloch, Francis & Ferrer, Helene, 2001. "Trade Fragmentation and Coordination in Strategic Market Games," Journal of Economic Theory, Elsevier, vol. 101(1), pages 301-316, November.
  9. Dubey, Pradeep & Shubik, Martin, 1978. "A theory of money and financial institutions. 28. The non-cooperative equilibria of a closed trading economy with market supply and bidding strategies," Journal of Economic Theory, Elsevier, vol. 17(1), pages 1-20, February.
  10. BLOCH, Francis & GHOSAL, Sayantan, 1994. "Stable Trading Structures in Bilateral Oligopolies," CORE Discussion Papers 1994056, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Corchon, Luis C., 1994. "Comparative statics for aggregative games the strong concavity case," Mathematical Social Sciences, Elsevier, vol. 28(3), pages 151-165, December.
  12. Peck, James & Shell, Karl & Spear, Stephen E., 1992. "The market game: existence and structure of equilibrium," Journal of Mathematical Economics, Elsevier, vol. 21(3), pages 271-299.
  13. Cornes, Richard & Hartley, Roger, 2003. " Risk Aversion, Heterogeneity and Contests," Public Choice, Springer, vol. 117(1-2), pages 1-25, October.
  14. Giraud, Gael, 2003. "Strategic market games: an introduction," Journal of Mathematical Economics, Elsevier, vol. 39(5-6), pages 355-375, July.
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