Competition and Efficiency in Congested Markets

Daron Acemoglu and Asuman Ozdaglar

No 11201, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the efficiency of oligopoly equilibria in congested markets. The motivating examples are the allocation of network flows in a communication network or of traffic in a transportation network. We show that increasing competition among oligopolists can reduce efficiency, measured as the difference between users' willingness to pay and delay costs. We characterize a tight bound of 5/6 on efficiency in pure strategy equilibria. This bound is tight even when the number of routes and oligopolists is arbitrarily large. We also study the efficiency properties of mixed strategy equilibria.

JEL-codes: C62 D43 (search for similar items in EconPapers)
Date: 2005-03
New Economics Papers: this item is included in nep-bec, nep-fmk, nep-mic and nep-net
Note: EFG LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published as Acemoglu, Daron and Asuman Ozdaglar. "Competition and Efficiency in Congested Markets." Mathematics of Operations Research 32 (February 2007): 1-31.

Downloads: (external link)
http://www.nber.org/papers/w11201.pdf (application/pdf)

Related works:
Working Paper: Competition and Efficiency in Congested Markets (2005)
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:nbr:nberwo:11201

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w11201

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().