Bertrand-Edgeworth equilibrium: Manipulable residual demand

Prabal Roy Chowdhury (prabalrc@isid.ac.in)
Additional contact information
Prabal Roy Chowdhury: Indian Statistical Institute, New Delhi

Discussion Papers from Indian Statistical Institute, Delhi

Abstract: In this paper we seek to provide a resolution of the Edgeworth paradox for the case where firms are free to supply less than the quantity demanded, the residual demand function is {\it manipulable} (a generalization of the proportional one) and prices vary over a grid. We demonstrate that a unique equilibrium in pure strategies exist whenever the number of firms is sufficiently large. Interestingly, the equilibrium involves excess production. Moreover, depending on the parameter values, the `folk theorem' of perfect competition may or may not hold. The results go through even if the firms are asymmetric, or produce to order.

Keywords: Bertrand equilibrium; pure strategy; manipulable residual demand (search for similar items in EconPapers)
JEL-codes: D41 D43 L13 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2004-05
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.isid.ac.in/~planning/workingpapers/dp04-15.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:alo:isipdp:04-15

Access Statistics for this paper

More papers in Discussion Papers from Indian Statistical Institute, Delhi Contact information at EDIRC.
Bibliographic data for series maintained by Debasis Mishra (epuseminar@gmail.com).