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Stable pricing in monopoly and equilibrium-core of cost games

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Abstract

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.

Suggested Citation

  • 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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    File URL: ftp://mse.univ-paris1.fr/pub/mse/cahiers2005/B05023.pdf
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    References listed on IDEAS

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    1. Bonnisseau, Jean-Marc & Iehle, Vincent, 2007. "Payoff-dependent balancedness and cores," Games and Economic Behavior, Elsevier, vol. 61(1), pages 1-26, October.
    2. Faulhaber, Gerald R, 1975. "Cross-Subsidization: Pricing in Public Enterprises," American Economic Review, American Economic Association, vol. 65(5), pages 966-977, December.
    3. ten Raa, Thijs, 1983. "Supportability and anonymous equity," Journal of Economic Theory, Elsevier, vol. 31(1), pages 176-181, October.
    4. 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.
    5. 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.
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    More about this item

    Keywords

    Cooperative games; contestable markets; sustainability; subsidy free; parameterized cost games.;

    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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