Bertrand competition under decreasing returns involves a wide interval of pure strategy equilibrium prices. We first present results of experiments in which two, three and four identical firms repeatedly interact in this environment. Less collusion with more firms leads to lower average prices. With more than two firms, the predominant market price is 24, a price not predicted by conventional e...

In the paper a new approach to the Walrasian general equilibrium model of economy is presented. The classical market clearing condition is replaced by suitably formulated variational inequality. It states that the market clears for a commodity if its equilibrium price is positive; otherwise, there may be an excess supply of the commodity in equilibrium and then its price is zero. Such approach ...

With the technical development of the reading equipment, e-books have witnessed a gradual and steady increase in sales in recent years. Last year, smart phones announced to be able to perform additional functions as e-book reading devices, making it possible for retailers selling e-books for smart phones (SPR) such as iPhone to differentiate with those selling e-books for specific reading equip...

The literature on competing auctions offers a model where sellers compete for buyers by setting reserve prices. An outstanding conjecture (e.g., Peters and Severinov 1997) is that the sellers post prices close to their marginal costs when the market becomes large. This conjecture is confirmed in this paper: we show that if all sellers have zero costs, then the equilibrium reserve price converge...

I study the effects of the heterogeneity of traders’ horizons in a 2-period NREE model where all traders are risk averse. Owing to risk premia, short termism generates multiple equilibria. In particular two distinct patterns arise. Along the “low trading intensity equilibrium,” short termists anticipate a thinner second period market and, owing to risk aversion, scale back their trades. This re...

Rising wind penetrations can suppress wholesale energy prices by displacing higher-cost conventional generation from the merit order. Wind suffers disproportionately from this price suppression, because the price is most suppressed when wind availability is high, hindering wind-investment incentives. One way to mitigate this price suppression is by wind exercising market power, which introduces...

Bertrand competition under decreasing returns involves a wide interval of pure strategy equilibrium prices. We first present results of experiments in which two, three and four identical firms repeatedly interact in this environment. Less collusion with more firms leads to lower average prices. With more than two firms, the predominant market price is 24, a price not predicted by conventional e...

We study efficient algorithms for computing equilibrium price in the Fisher model for a class of nonlinear concave utility functions, the logarithmic utility functions. A duality relation is derived between buyers and sellers under such utility functions. It is applied to design a polynomial time algorithm for calculating equilibrium price, for the special case when either the number of sellers...

A potential source of instability of many economic models is that agents have little incentive to stick with the equilibrium. We show experimentally that this may matter with price competition. The control variable is a price floor, which increases the cost of deviating from equilibrium. Theoretically the floor allows competitors to obtain higher profits, as low prices are excluded. However, be...

We analyze the e ects of a legally-binding price oor using Hotelling's model of locational competition. A moderate priceoor destroys the maximal di erentiation equilibrium of d'Aspremont et. al., by allowing rms to compete more aggressively for market share. Minimum di erentiation results, with lower equilibrium prices. A low price oor results in mulitiple equilibria both minimum and maximum di...