Perfect competition in an oligopoly (including bilateral monopoly)

We show that if limit orders are required to vary smoothly, then strategic (Nash) equilibria of the double auction mechanism yield competitive (Walras) allocations. It is not necessary to have competitors on any side of any market: smooth trading is a substitute for price wars. In particular, Nash equilibria are Walrasian even in a bilateral monopoly.

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Year of publication:	2009
Authors:	Dubey, Pradeep ; Sondermann, Dieter
Published in:	Games and Economic Behavior. - Elsevier, ISSN 0899-8256. - Vol. 65.2009, 1, p. 124-141
Publisher:	Elsevier
Keywords:	Limit orders Double auction Nash equilibria Walras equilibria Mechanism design

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005409143