Perfect Competition in a Bilateral Monopoly

Pradeep Dubey and Dieter Sondermann
Additional contact information
Dieter Sondermann: Department of Economics, University of Bonn, Bonn.

No 05-01, Department of Economics Working Papers from Stony Brook University, Department of Economics

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; perfect competition; bilateral monopoly; mechanism design (search for similar items in EconPapers)
JEL-codes: C72 D41 D42 D44 D61 (search for similar items in EconPapers)
Pages: 24 pages.
Date: 2005-03-21
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.stonybrook.edu/commcms/economics/research/papers/2005/Perfectcomp.pdf First version, 2005 (application/pdf)

Related works:
Working Paper: Perfect Competition in a Bilateral Monopoly (2003)
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:nys:sunysb:05-01

Access Statistics for this paper

More papers in Department of Economics Working Papers from Stony Brook University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by ().