Convergence of strategic behavior to price taking
نویسنده
چکیده
We address the following issue: what can be said about the degree of competition, in a set of markets with a large number of participants, when no information on the distribution of individual characteristics is available? Our main result is that the proportion of individuals whose strategic behavior differs substantially from price taking, converges to zero as the number of market participants becomes large, regardless of the distribution of characteristics. © 2008 Elsevier Inc. All rights reserved. JEL classification: D43; D50; C72
منابع مشابه
Information precision and asymptotic efficiency of industrial markets
I present a strategic model of a bilateral oligopoly with asymmetric information to examine (i) the validity of the conjecture of price-taking behavior in such markets as the number of agents becomes large and (ii) the effect of the rate that individual information precision decreases with increased number of agents on convergence to price-taking and efficiency. I show that with downstream comp...
متن کاملAsymptotic Efficiency of Industrial Markets
Online market places have an unprecedented power of bringing together a large number of buyers and sellers and aggregating information. Despite its benefits, this scale of aggregation of private information may bring about adverse effects that can cause inefficiencies, which can be ignored by conventional analysis. In this paper, I present a strategic model of a large industrial market with asy...
متن کاملPrice Taking as the Asymptotic Limit of Strategic Behavior
It is widely accepted among economists that in a system of markets where individual participants are small relative to the market size, individuals have a negligible effect on the determination of market outcomes, so they may be thought of as exhibiting a ’price taking’ behavior. Of course, in order to make sense of this statement one has to attach a meaning to ’a small individual relative to m...
متن کاملPrice Discovery Using a Double Auction
We investigate equilibrium in the buyer’s bid double auction (BBDA) in a model with correlated signals and either private or interdependent values. Using a combination of theorems and numerical experiments, we demonstrate that simple equilibria exist even in small markets. Moreover, we bound traders’ strategic behavior as a function of market size and derive rates of convergence to zero of (i) ...
متن کاملA Survey on the Existence of Price Discrimination Behavior in Iran’s Saffron Exporting Market by Using PTM Model
One of the most important effects of exchange rate movementsisitseffecton the exporting price of different products. According to the new trade theories, market structure plays an important role in relating exchange rate depreciations to price declines. In Iran, exchange rate has increased in recent years.Inspired by this assumption, this paper attempts to investigate the impact of exchange rat...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
عنوان ژورنال:
- Games and Economic Behavior
دوره 65 شماره
صفحات -
تاریخ انتشار 2009