Uncertainty and Endogenous Selection of Economic Equilibria
This paper presents a model of co-ordination failures based on market power and local oligopoly. The economy exhibits a multiplicity of Pareto-ranked equilibria. The introduction of uncertainty generates an endogenous equilibrium selection process, due to a strategic use of information by firms. The economy is more likely to settle on some equilibria than on others. We argue that a full understanding of these robustness criteria is needed before any policy which is intended to help co-ordinate the level of activity to a Pareto dominant outcome can be successfully implemented.
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| Date of creation: | 24 Jun 2003 |
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| Handle: | RePEc:rtv:ceisrp:5 |
| Contact details of provider: | Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma Phone: +390672595601 Fax: +39062020687 Web page: http://www.ceistorvergata.it Email: More information through EDIRC
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References listed on IDEAS
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