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Limits of Exact Equilibria for Capacity Constrained Sellers with costlySearch

  • Michael Peters

The paper contrasts the exact equilibria of games where sellers compete in price with the rational expectations equilibria of these games. It is shown that the distribution of prices offered by sellers in both the exact and rational expectations equilibrium converge weakly to the same limit as the number of buyers and sellers grows large. Furthermore, the payoffs that sellers face in both kinds of equilibrium have the market utility property in the limit.

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File URL: http://www.economics.utoronto.ca/public/workingPapers/UT-ECIPA-PETERS-98-01.ps
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File URL: http://www.economics.utoronto.ca/public/workingPapers/UT-ECIPA-PETERS-98-01.pdf
File Function: MainText
Download Restriction: no

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number peters-98-01.

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Length: 24 pages
Date of creation: 11 Jul 1998
Date of revision:
Handle: RePEc:tor:tecipa:peters-98-01
Contact details of provider: Postal: 150 St. George Street, Toronto, Ontario
Phone: (416) 978-5283

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  1. Carlton, Dennis W, 1978. "Market Behavior with Demand Uncertainty and Price Inflexibility," American Economic Review, American Economic Association, vol. 68(4), pages 571-87, September.
  2. Michael Peters, 1995. "A Competitive Distribution of Auctions," Working Papers peters-95-03, University of Toronto, Department of Economics.
  3. Peters, Michael, 1997. "On the Equivalence of Walrasian and Non-Walrasian Equilibria in Contract Markets: The Case of Complete Contracts," Review of Economic Studies, Wiley Blackwell, vol. 64(2), pages 241-64, April.
  4. Daron Acemoglu & Robert Shimer, 1998. "Efficient Unemployment Insurance," NBER Working Papers 6686, National Bureau of Economic Research, Inc.
  5. Kenneth Burdett & Shouyong Shi & Randall Wright, 1998. "Pricing with frictions," Working Papers 98-9, Federal Reserve Bank of Philadelphia.
  6. Douglas Gale, 1994. "Equilibria and Pareto Optima of Markets with Adverse Selection," Papers 0046, Boston University - Industry Studies Programme.
  7. Wilson, Robert B, 1989. "Efficient and Competitive Rationing," Econometrica, Econometric Society, vol. 57(1), pages 1-40, January.
  8. Montgomery, James D, 1991. "Equilibrium Wage Dispersion and Interindustry Wage Differentials," The Quarterly Journal of Economics, MIT Press, vol. 106(1), pages 163-79, February.
  9. Ehud Kalai & Ehud Lehrer, 1991. "Subjective Equilibrium in Repeated Games," Discussion Papers 981, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  10. Michael Peters & Sergei Severinov, 1995. "Competition Among Sellers who offer Auctions Instead of Prices," Working Papers peters-95-02, University of Toronto, Department of Economics.
  11. Moen, Espen R, 1997. "Competitive Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 385-411, April.
  12. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
  13. McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, vol. 61(6), pages 1281-1312, November.
  14. James Bergin & Dan Bernhardt, 1989. "Anonymous Sequential Games with Aggregate Uncertainty," Working Papers 760, Queen's University, Department of Economics.
  15. Peters, Michael, 1984. "Bertrand Equilibrium with Capacity Constraints and Restricted Mobility," Econometrica, Econometric Society, vol. 52(5), pages 1117-27, September.
  16. Gale, Douglas, 1992. "A Walrasian Theory of Markets with Adverse Selection," Review of Economic Studies, Wiley Blackwell, vol. 59(2), pages 229-55, April.
  17. Gould, John P, 1978. "Inventories and Stochastic Demand: Equilibrium Models of the Firm and Industry," The Journal of Business, University of Chicago Press, vol. 51(1), pages 1-42, January.
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