“Very Nice” trivial equilibria in strategic market games

Busetto, Francesca; Codognato, Giulio

doi:10.1016/j.jet.2005.03.005

Cited by 8 publications

(19 citation statements)

References 5 publications

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“…They coined autarky 'nice' under such circumstances. This issue was further investigated by Busetto and Codognato (2006) who considered whether autarky remained an equilibrium if any (not just small) external bids and offers are made to the market (in the same proportion), and coined it 'very nice' if so. Dickson and Hartley (2012) showed that autarky is nice if and only if it is the only equilibrium in the game, and very nice if and only if no gains from trade exist, and proceeded to consider whether there are economies in which autarky is nice but not very nice; that is, economies in which there are gains from trade but no trade takes place.…”

Section: Existence Of Non-autarkic Equilibriummentioning

confidence: 99%

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On Cobb-Douglas Preferences in Bilateral Oligopoly

Dickson¹

2014

Recherches Économiques De Louvain

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Bilateral oligopoly is a simple model of exchange in which a finite set of sellers seek to exchange the goods they are endowed with for money with a finite set of buyers, and no price-taking assumptions are imposed. If trade takes place via a strategic market game bilateral oligopoly can be thought of as two linked proportional-sharing contests: in one the sellers share the aggregate bid from the buyers in proportion to their supply and in the other the buyers share the aggregate supply in proportion to their bids. The analysis can be separated into two 'partial games'. First, fix the aggregate bid at B; in the first partial game the sellers contest this fixed prize in proportion to their supply and the aggregate supply in the equilibrium of this game isX (B). Next, fix the aggregate supply at X; in the second partial game the buyers contest this fixed prize in proportion to their bids and the aggregate bid in the equilibrium of this game isB(X). The analysis of these two partial games takes into account competition within each side of the market. Equilibrium in bilateral oligopoly must take into account competition between sellers and buyers and requires, for example,B(X (B)) = B. When all traders have Cobb-Douglas preferencesX (B) does not depend on B andB(X) does not depend on X: whilst there is competition within each side of the market there is no strategic interdependence between the sides of the market. The Cobb-Douglas assumption provides a tractable framework in which to explore the features of fully strategic trade but it misses perhaps the most interesting feature of bilateral oligopoly, the implications of which are investigated.

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Section: Existence Of Non-autarkic Equilibriummentioning

confidence: 99%

“…A Shapley equilibrium (Shapley 1976) exists if either there is an equilibrium in which trade takes place, or autarky is very nice (see Busetto and Codognato (2006) or Dickson and Hartley (2012)). In a Cobb-Douglas economy the existence of a Shapley equilibrium is guaranteed.…”

Section: Existence Of Non-autarkic Equilibriummentioning

confidence: 99%

On Cobb-Douglas Preferences in Bilateral Oligopoly

Dickson¹

2014

Recherches Économiques De Louvain

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“…Cordella and Gabszewicz (1998), Busetto and Codognato (2006) and Godal (2008) provide examples of economic environments in which there are gains from trade and yet the only Nash equilibrium in the strategic market game is autarky, so no trade takes place. Indeed, Busetto and Codognato's (2006) example was constructed to demonstrate precisely that a ‘Shapley equilibrium’ (as described by the quote above) might fail to exist. Our aim in this paper is a general result in buy or sell games that details the conditions under which the only equilibrium is autarky, and to relate this to the presence of gains from trade.…”

Section: Introductionmentioning

confidence: 99%

“…We demonstrate (Proposition 3) that autarky is nice if and only if it is the only equilibrium in the game. Busetto and Codognato (2006) call autarky ‘very nice’ when it is robust to any external bid and offer being made (in the same proportion). We demonstrate (Proposition 2) that autarky is very nice if and only if no gains from trade exist.…”

Section: Introductionmentioning

confidence: 99%

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On ‘Nice’ and ‘Very Nice’ Autarkic Equilibria in Strategic Market Games*

Dickson

Hartley

2012

The Manchester School

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We study a strategic market game in which traders are endowed with both a good and money and can choose whether to buy or sell the good. We derive conditions under which a non‐autarkic equilibrium exists and when the only equilibrium is autarky. Autarky is ‘nice’ (robust to small perturbations in the game) when it is the only equilibrium, and ‘very nice’ (robust to large perturbations) when no gains from trade exist. We characterize economies where autarky is nice but not very nice, i.e. when gains from trade exist and yet no trade takes place.

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Noncooperative oligopoly equilibrium in markets with hierarchical competition

Julien

2023

Int J Game Theory

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This paper deals with the existence of a non-cooperative sequential equilibrium in interrelated markets with heterogeneous atomic traders. Since this model features a rich set of strategic interactions, there are two kinds of problems associated with the existence of equilibrium. First, existence and uniqueness of followers'strategies are not guaranteed. Second, the no-trade equilibrium is always an equilibrium outcome. To overcome these two di¢ culties we consider a di¤erentiable approach. We show that the set of equations which determines the strategies of followers is a variety with the required dimension, i.e. the vector mapping which de…nes this set is a local C 2 -di¤eomorphism. The continuous di¤erentiability of followers'strategies is critical for the existence of an interior equilibrium. Unlike the simultaneous move games, exchange can take place in one subgame while autarky can hold in another subgame, in which case only leaders (followers) make trade. Some examples buttress the approach and discuss the assumptions made on the primitives.

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“Very Nice” trivial equilibria in strategic market games

Cited by 8 publications

References 5 publications

On Cobb-Douglas Preferences in Bilateral Oligopoly

On Cobb-Douglas Preferences in Bilateral Oligopoly

On ‘Nice’ and ‘Very Nice’ Autarkic Equilibria in Strategic Market Games*

Noncooperative oligopoly equilibrium in markets with hierarchical competition

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