IDEAS home Printed from https://ideas.repec.org/p/wrk/warwec/837.html
   My bibliography  Save this paper

Cournot-Walras Equilibrium as a Subgame Perfect Equilibrium

Author

Listed:
  • Busetto, Francesca

    (University of Udine)

  • Codognato, Giulio

    (University of Udine)

  • Ghosal, Sayantan

    (Department of Economics, University of Warwick)

Abstract

In this paper, we investigate the problem of the strategic foundation of the Cournot-Walras equilibrium approach. To this end, we respecify a'la Cournot-Walras the mixed version of a model of simultaneous, noncooperative exchange, originally proposed by Lloyd S.Shapley. We show, through an example, that the set of the Cournot-Walras equilibrium allocations of this respecification does not coincide with the set of the Cournot-Nash equilibrium allocations of the mixed version of the original Shapley's model. As the nonequivalence, in a one-stage setting, can be explained by the intrinsic two-stage nature of the Cournot-Walras equilibrium concept, we are led to consider a further reformulation of the Shapley's model as a two-stage game, where the atoms move in the first stage and the atomless sector moves in the second stage. Our main result shows that the set of the Cournot-Walras equilibrium allocations coincides with a specific set of subgame perfect equilibrium allocations of this two-stage game, which we call the set of the Pseudo-Markov perfect equilibrium allocations.

Suggested Citation

  • Busetto, Francesca & Codognato, Giulio & Ghosal, Sayantan, 2008. "Cournot-Walras Equilibrium as a Subgame Perfect Equilibrium," The Warwick Economics Research Paper Series (TWERPS) 837, University of Warwick, Department of Economics.
  • Handle: RePEc:wrk:warwec:837
    as

    Download full text from publisher

    File URL: https://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp_837.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. José A. F. Machado & José Mata, 2001. "Earning functions in Portugal 1982-1994: Evidence from quantile regressions," Empirical Economics, Springer, pages 115-134.
    2. Hurst, Michael E. & Chiswick, Barry R., 2000. "The Employment, Unemployment and Unemployment Compensation Benefits of Immigrants," IZA Discussion Papers 129, Institute for the Study of Labor (IZA).
    3. Green, Francis & Machin, Stephen & Wilkinson, David, 1998. "The Meaning and Determinants of Skills Shortages," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(2), pages 165-187, May.
    4. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    5. Harmon, Colm & Walker, Ian, 1995. "Estimates of the Economic Return to Schooling for the United Kingdom," American Economic Review, American Economic Association, pages 1278-1286.
    6. Harald Bauder, 2006. "Origin, employment status and attitudes towards work: immigrants in Vancouver, Canada," Work, Employment & Society, British Sociological Association, vol. 20(4), pages 709-729, December.
    7. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, November.
    8. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    9. Borjas, George J, 1987. "Self-Selection and the Earnings of Immigrants," American Economic Review, American Economic Association, vol. 77(4), pages 531-553, September.
    10. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
    11. Melly, Blaise, 2005. "Decomposition of differences in distribution using quantile regression," Labour Economics, Elsevier, vol. 12(4), pages 577-590, August.
    12. Ottaviano, Gianmarco & Peri, Giovanni, 2005. "Rethinking the Gains from Immigration: Theory and Evidence from the US," CEPR Discussion Papers 5226, C.E.P.R. Discussion Papers.
    13. Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-243, May.
    14. Clark, Ken & Lindley, Joanne, 2006. "Immigrant Labour Market Assimilation and Arrival Effects: Evidence from the UK Labour Force Survey," IZA Discussion Papers 2228, Institute for the Study of Labor (IZA).
    15. James Albrecht & Anders Bjorklund & Susan Vroman, 2003. "Is There a Glass Ceiling in Sweden?," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 145-177, January.
    16. Christian Dustmann & Francesca Fabbri, 2005. "Immigrants in the British labour market," Fiscal Studies, Institute for Fiscal Studies, vol. 26(4), pages 423-470, December.
    17. Lee, Sokbae, 2007. "Endogeneity in quantile regression models: A control function approach," Journal of Econometrics, Elsevier, pages 1131-1158.
    18. Glover, Stephen & Gott, Ceri & Loizillon, Anaïs & Portes, Jonathan & Price, Richard & Spencer, Sarah & Srinivasan, Vasanthi & Willis, Carole, 2001. "Migration: an economic and social analysis," MPRA Paper 75900, University Library of Munich, Germany.
    19. Chiswick, Barry R. & Le, Anh T. & Miller, Paul W., 2006. "How Immigrants Fare Across the Earnings Distribution: International Analyses," IZA Discussion Papers 2405, Institute for the Study of Labor (IZA).
    20. Chiswick, Barry R, 1980. "The Earnings of White and Coloured Male Immigrants in Britain," Economica, London School of Economics and Political Science, vol. 47(185), pages 81-87, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David Mayer-Foulkes, 2011. "Vulnerable Markets," DEGIT Conference Papers c016_040, DEGIT, Dynamics, Economic Growth, and International Trade.
    2. Julien, Ludovic A., 2011. "Unemployment equilibrium and economic policy in mixed markets," Economic Modelling, Elsevier, vol. 28(4), pages 1931-1940, July.
    3. Alex Dickson & Roger Hartley, 2013. "Bilateral oligopoly and quantity competition," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), pages 979-1004.
    4. Ludovic JULIEN, 2009. "Consistent conjectural variations equilibria in strategic multilateral exchange," Economics Bulletin, AccessEcon, vol. 29(1), pages 465-473.
    5. Julien, Ludovic A., 2013. "On Stackelberg competition in strategic multilateral exchange," Research in Economics, Elsevier, pages 59-75.
    6. Busetto, Francesca & Codognato, Giulio & Ghosal, Sayantan, 2011. "Noncooperative oligopoly in markets with a continuum of traders," Games and Economic Behavior, Elsevier, vol. 72(1), pages 38-45, May.
    7. Ludovic A. Julien & Fabrice Tricou, 2010. "Oligopoly Equilibria “à la Stackelberg” in Pure Exchange Economies," Recherches économiques de Louvain, De Boeck Université, vol. 76(2), pages 175-194.
    8. Dickson Alex, 2013. "Cobb-Douglas preferences in bilateral oligopoly," Working Papers 1306, University of Strathclyde Business School, Department of Economics.
    9. Francesca Busetto & Giulio Codognato & Sayantan Ghosal, "undated". "Noncooperative oligopoly in markets with a continuum of traders: a limit theorem a la Cournot," Working Papers 2014_01, Business School - Economics, University of Glasgow.
    10. Busetto, Francesca & Codognato, Giulio & Ghosal, Sayantan, 2014. "Noncooperative Oligopoly in Markets with a Continuum of Traders: A Limit Theorem µa la Cournot," SIRE Discussion Papers 2014-019, Scottish Institute for Research in Economics (SIRE).
    11. Julien, Ludovic A., 2009. "Conjectural variations, symmetric equilibria and economic policy," Economic Modelling, Elsevier, vol. 26(5), pages 1115-1120, September.

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wrk:warwec:837. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Margaret Nash). General contact details of provider: http://edirc.repec.org/data/dewaruk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.