Market making oligopoly

Loertscher, Simon (March 2005). Market making oligopoly (Discussion Papers 05-12). Bern: Department of Economics

[img]
Preview
Text
dp0512.pdf - Published Version
Available under License Creative Commons: Attribution (CC-BY).

Download (337kB) | Preview

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

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:

02 Oct 2020 11:13

JEL Classification:

C72, D41, D43, L13

BORIS DOI:

10.7892/boris.145675

URI:

https://boris.unibe.ch/id/eprint/145675

Actions (login required)

Edit item Edit item
Provide Feedback