NASH EQUILIBRIA IN A MODEL OF MULTIPRODUCT PRICE COMPETITION: AN ASSIGNMENT PROBLEM

Iván Arribas and Amparo Urbano

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: We study the market interaction of a finite number of single-product firms and a representative buyer, where the buyer consumes bundles of these goods. The buyers' value function determines their willingness to pay for subsets of goods. We show that subgame perfect Nash-equilibrium outcomes are solutions of the linear relaxation of an integer programming assignment problem and that they always exits. The (subgame perfect) Nash-equilibrium price set is characterized by the Pareto frontier of the associated dual problem's projection on the firms' price vectors. We identify the Nash-equilibrium prices for monotonic buyers' value functions and, more importantly, we show that some central solution concepts in cooperative game theory are (subgame perfect) equilibrium prices of our strategic game.

Keywords: Multiproduct price competition; interger programming; subgame perfect nash equilibria (search for similar items in EconPapers)
JEL-codes: D21 D41 D43 D72 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2003-06
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Published by Ivie

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http://www.ivie.es/downloads/docs/wpasad/wpasad-2003-21.pdf Fisrt version / Primera version, 2003 (application/pdf)

Related works:
Journal Article: Nash equilibria in a model of multiproduct price competition: an assignment problem (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2003-21

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