Market Games with Multiple Trading Posts

Tilburg University, CentER Working Paper No. 1999-40

22 Pages Posted: 24 Mar 2000

See all articles by Leonidas C. Koutsougeras

Leonidas C. Koutsougeras

The University of Manchester - School of Social Sciences

Date Written: 1999

Abstract

We study market games with multiple posts per commodity. We provide some facts that characterize prices of commodities across posts and show the following results: (i) As the number of agents increases, the price variability across posts for a commodity becomes smaller and it becomes zero when the number of agents becomes infinite, irrespectively of the distribution of characteristics in the economy. (ii) The set of equilibrium prices and allocations of a market game is a subset of the set of equilibria of another game with more trading posts per commodity. (iii) We demonstrate via an example that the inclusion can be strict, as there are equilibria with price disparities across posts for a commodity which cannot be captured with less trading posts. (iv) One can pass from an equilibrium of a market game into an equilibrium of a game with less trading posts per commodity, by consolidating posts where the price of a commodity is uniform.

Keyword: game theory

JEL Classification: C72

Suggested Citation

Koutsougeras, Leonidas C., Market Games with Multiple Trading Posts (1999). Tilburg University, CentER Working Paper No. 1999-40, Available at SSRN: https://ssrn.com/abstract=199749 or http://dx.doi.org/10.2139/ssrn.199749

Leonidas C. Koutsougeras (Contact Author)

The University of Manchester - School of Social Sciences ( email )

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Manchester, M13 9PL
United Kingdom