Market power in water markets can be modeled as simultaneous quantity competition on a river structure and analyzed by applying social equilibrium. In an example of duopoly market, we argue that the lack backward induction logic implies upstream supplier foregoes profitable strategic manipulation to downstream supplier. To incorporate induction, propose Stackelberg equilibrium concept. We prove...

Walrasian and statistical equilibrium have distinct methodologies and the relation between the two equilibrium concepts has been unknown. We reformulate the concept of statistical equilibrium and prove its existence under much less restrictive assumptions than in the previous literature. As a corollary, we show that Walrasian equilibrium can be interpreted as a special case of statistical equil...

International integration strengthening intra-industrial trade may have important implications for employment, wages and inequality. The reason is that product market integration enhances export possibilities through easier access to foreign markets, but also import threats arising from foreign firms entering the domestic market. We explore the implications of these mechanisms in a genereal equ...

In 1950, John Nash contributed a remarkable one-page PNAS article that defined and characterized a notion of equilibrium for n- person games. This notion, now called the "Nash equilibrium," has been widely applied and adapted in economics and other behavioral sciences. Indeed, game theory, with the Nash equilibrium as its centerpiece, is becoming the most prominent unifying theory of social sci...

In this paper we investigate incentive aspects of a general price-setting equilibrium principle in production economies with increasing returns or more general types of non-convexities. We do so by introducing the notion of generalized mechanism. We allow preferences and individual endowments to be unknown to the planner. We present a simple generalized mechanism whose social equilibrium alloca...

In this research, the social behavior of the participants in a Prisoner's Dilemma laboratory game is explained on the basis of the quantal response equilibrium concept and the representation of the game in Markov strategies. In previous research, we demonstrated that social interaction during the experiment has a positive influence on cooperation, trust, and gratefulness. This research shows th...