Loertscher, Simon (March 2005). Market making oligopoly (Discussion Papers 05-12). Bern: Department of Economics
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This paper analyzes price competition between market makers who set costly capacity constraints before they intermediate between producers and consumers. The key finding is that the unique perfect equilibrium outcome is Cournot if capacity is costly and rationing efficient. This result is interesting for two main reasons: It generalizes Kreps and Scheinkman
(1983) to an arbitrary number of market makers, and it contrasts with Stahl (1988) and the broader literature on market making, such as Gehrig (1993), Fingleton (1997) and Rust and Hall (2003), where due to the absence of capacity constraints on the input market the Bertrand paradox typically prevails.
Item Type: |
Working Paper |
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Division/Institute: |
03 Faculty of Business, Economics and Social Sciences > Department of Economics |
UniBE Contributor: |
Lörtscher, Simon |
Subjects: |
300 Social sciences, sociology & anthropology > 330 Economics |
Series: |
Discussion Papers |
Publisher: |
Department of Economics |
Language: |
English |
Submitter: |
Lars Tschannen |
Date Deposited: |
02 Oct 2020 11:13 |
Last Modified: |
05 Dec 2022 15:39 |
JEL Classification: |
C72, D41, D43, L13 |
BORIS DOI: |
10.7892/boris.145675 |
URI: |
https://boris.unibe.ch/id/eprint/145675 |
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