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Stable pricing in monopoly and equilibrium-core of cost games

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We prove the existence of subsidy free and sustainable pricing schedule in multiproduct contestable markets. We allow firms to discriminate the local markets that are composed by a set of the products line and a set of agents. Results are obtained under an assumption of fair sharing cost and under boundary condition of demand functions. The pricing problem is modelled in terms of equilibrium-core allocations of parameterized cost games

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  • Vincent Iehlé, 2004. "Stable pricing in monopoly and equilibrium-core of cost games," Cahiers de la Maison des Sciences Economiques b05023, Université Panthéon-Sorbonne (Paris 1).
    • Handle: RePEc:mse:wpsorb:b05023
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    1. Faulhaber, Gerald R, 1975. "Cross-Subsidization: Pricing in Public Enterprises," American Economic Review, American Economic Association, vol. 65(5), pages 966-977, December.
    2. Bonnisseau, Jean-Marc & Iehle, Vincent, 2007. "Payoff-dependent balancedness and cores," Games and Economic Behavior, Elsevier, vol. 61(1), pages 1-26, October.
    3. ten Raa, Thijs, 1983. "Supportability and anonymous equity," Journal of Economic Theory, Elsevier, vol. 31(1), pages 176-181, October.
    4. John C. Panzar & Robert D. Willig, 1977. "Free Entry and the Sustainability of Natural Monopoly," Bell Journal of Economics, The RAND Corporation, vol. 8(1), pages 1-22, Spring.
    5. Leonard J. Mirman & Yair Tauman & Israel Zang, 1985. "Supportability, Sustainability, and Subsidy-Free Prices," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 114-126, Spring.
    6. William W. Sharkey, 1981. "Existence of Sustainable Prices for Natural Monopoly Outputs," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 144-154, Spring.
    7. Baumol, William J & Bailey, Elizabeth E & Willig, Robert D, 1977. "Weak Invisible Hand Theorems on the Sustainability of Multiproduct Natural Monopoly," American Economic Review, American Economic Association, vol. 67(3), pages 350-365, June.
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    More about this item

    Keywords

    Cooperative games; contestable markets; sustainability; subsidy free; parameterized cost games;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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