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Searching Market Equilibria under Uncertain Utilities

Author

Listed:
  • A.V. Kryazhimskii
  • A. Nentjes
  • S. Shibayev
  • A.M. Tarasyev

Abstract

Our basic model is a noncooperative multi-player game in which the governments of neighboring counties trade emission reductions. We prove the existence of a market equilibrium (combining properties of Pareto and Nash equilibria) and study algorithms of searching a market equilibrium. The algorithms are interpreted as repeated auctions in which the auctioneer has no information on countries' costs and benefits and every government has no information on the costs and benefits of other countries. In each round of the auction, the auctioneer offers individual prices for emission reductions and observes countries' best replies. We consider several auctioneer's policies and provide conditions that guarantee approaching a market equilibrium. From a game-theoretical point of view, the repeated auction describes a process of learning in a noncooperative repeated game with incomplete information.

Suggested Citation

  • A.V. Kryazhimskii & A. Nentjes & S. Shibayev & A.M. Tarasyev, 1998. "Searching Market Equilibria under Uncertain Utilities," Working Papers ir98007, International Institute for Applied Systems Analysis.
    • Handle: RePEc:wop:iasawp:ir98007
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    References listed on IDEAS

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    Cited by:

    1. F. de Vries, 1999. "The Behavioral Firm and Its Internal Game: Evolutionary Dynamics of Decision Making," Working Papers ir99036, International Institute for Applied Systems Analysis.
    2. Dijkstra, Bouwe R. & Nentjes, Andries, 2020. "Pareto-Efficient Solutions for Shared Public Good Provision: Nash Bargaining versus Exchange-Matching-Lindahl," Resource and Energy Economics, Elsevier, vol. 61(C).

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