Perfect Competition in an Oligoply (including Bilateral Monopoly)

Pradeep Dubey und Dieter Sondermann ()

Bonn Econ Discussion Papers from University of Bonn, Germany

Abstract: 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.

Keywords: Limit orders; double auction; Nash equilibria; Walras equilibria; mechanism design (search for similar items in EconPapers)
JEL-codes: C72 D41 D44 D61 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-gth, nep-ind, nep-mic and nep-mst
Date: 2008-05
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Persistent link: http://EconPapers.repec.org/RePEc:bon:bonedp:bgse9_2008

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