The strategic Marshallian cross

Alex Dickson () and Roger Hartley

No KERP 2007/13, Keele Economics Research Papers from Centre for Economic Research, Keele University

Abstract: We prove existence and uniqueness of non-autarkic equilibria in bilateral oligopoly assuming only that preferences are binormal and satisfy a weakened version of gross substitutes. We permit complete heterogeneity of preferences and our analysis exploits the fact that payoffs depend only on own strategy and two universal aggregates. This allows us to define strategic versions of supply and demand curves such that non-autarkic Nash equilibria are in 1-1 correspondence with intersections of these curves. The same approach can be used to establish comparative statics under the assumptions above. As examples, we focus on adding players and changing endowments. This competitive approach also allows us to conclude that much of conventional Marshallian analysis is robust to strategic manipulation.

Keywords: Strategic Marshallian cross; strategic manipulation; imperfect competition. (search for similar items in EconPapers)
JEL-codes: C72 D43 D50 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2007-10
New Economics Papers: this item is included in nep-com, nep-cse and nep-gth
Note: This is the revised version of an earlier paper, first circulated as Keele Economics Research Paper 04/07 and University of Manchester Economics Discussion Paper 0523, under different titles.
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Journal Article: The strategic Marshallian cross (2008)
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