Partial Equilibrium Analysis in a Market Game:the Strategic Marshallian Cross

Alex Dickson () and Roger Hartley

No KERP 2004/07, Keele Economics Research Papers from Centre for Economic Research, Keele University

Abstract: We show how non-price-taking behavior by agents in partial equilibrium can be analyzed using strategic versions of Marshallian supply and demand curves. There is a Nash equilibrium of a two-good, strategic market game at a given price if and only if the strategic supply and demand curves intersect at that price. This result allows us to prove new existence and uniqueness results for such games, which have previously been obtained only by imposing somewhat restrictive assumptions such as symmetry on each side of the market. It also enables us to show that many conventional comparative statics results of Marshallian analysis survive strategic play by buyers and sellers. Finally, we show that price manipulation in this game always has the effect of reducing supply and demand and that thick markets are almost competitive.

Keywords: Strategic Market Game; Imperfect Competition; Marshallian Cross (search for similar items in EconPapers)
JEL-codes: C72 D43 D50 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2004-09
New Economics Papers: this item is included in nep-com, nep-fmk and nep-mic
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