Competition and Regulation via Supply and DemandFunctions in Oligopolistic-Oligopsonistic Markets

In this study, we regard the oligopolistic-oligopsonistic markets within the framework of a“double auction” in which both buyers and sellers make bids. To this end, we introduce gameswhere declarations of supply and demand functions (which need not be true) are treated asstrategic variables of producers and consumers, respectively, rather than just as “bindingcommitments” on the part of these parties. Whether firms produce with positive or zero marginalcost, the number of agents on each side of the market, whether consumers act as a union or notand time structure of the moves lead to different games. Existence of symmetric equilibria ofeach of these games is established. Most of them are shown to be unique. The equilibriumoutcomes of these are compared with the standard Cournot outcome as well as amongthemselves regarding the market price, total quantity produced, individual consumer’s surplus,individual firms’ profit and social welfare they lead to. To allow the consumers to behavestrategically along with the producers, naturally makes the former better off and the latter worseoff, while the net effect of this on total social welfare turns out to be case-contingent.[...]