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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: https://www.economics.utoronto.ca/public/workingPapers/UT-ECIPA-PETERS-98-01.ps
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File URL: https://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
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  1. Bergin, James & Bernhardt, Dan, 1992. "Anonymous sequential games with aggregate uncertainty," Journal of Mathematical Economics, Elsevier, vol. 21(6), pages 543-562.
  2. Douglas Gale, 1992. "A Walrasian Theory of Markets with Adverse Selection," Review of Economic Studies, Oxford University Press, vol. 59(2), pages 229-255.
  3. Raymond Deneckere & James Peck, 1992. "Competition over Price and Service Rate when Demand is Stochastic: A Strategic Analysis," Discussion Papers 990, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. Peters, Michael, 1984. "Bertrand Equilibrium with Capacity Constraints and Restricted Mobility," Econometrica, Econometric Society, vol. 52(5), pages 1117-27, September.
  5. Gale, Douglas, 1996. "Equilibria and Pareto Optima of Markets with Adverse Selection," Economic Theory, Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 207-35, February.
  6. 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.
  7. Daron Acemoglu & Robert Shimer, 1999. "Efficient Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 893-928, October.
  8. 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.
  9. Wilson, Robert B, 1989. "Efficient and Competitive Rationing," Econometrica, Econometric Society, vol. 57(1), pages 1-40, January.
  10. Moen, Espen R, 1997. "Competitive Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 385-411, April.
  11. 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.
  12. Michael Peters, 1997. "A Competitive Distribution of Auctions," Review of Economic Studies, Oxford University Press, vol. 64(1), pages 97-123.
  13. James D. Montgomery, 1991. "Equilibrium Wage Dispersion and Interindustry Wage Differentials," The Quarterly Journal of Economics, Oxford University Press, vol. 106(1), pages 163-179.
  14. Ehud Kalai & Ehud Lehrer, 1991. "Subjective Equilibrium in Repeated Games," Discussion Papers 981, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  15. Michael Peters, 1995. "On the Equivalence of Walrasian and Non-Walrasian Equilibria in Contract Markets: The case of Complete Contracts," Working Papers peters-95-01, University of Toronto, Department of Economics.
  16. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
  17. McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, vol. 61(6), pages 1281-1312, November.
  18. Kenneth Burdett & Shouyong Shi & Randall Wright, 1998. "Pricing with frictions," Working Papers 98-9, Federal Reserve Bank of Philadelphia.
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