the experience of countries that have liberalized their electricity markets has shown that the assumption that markets will naturally produce a competitive result is not always justified. the most important concern refers to the changes of demand and price which result in providers’ mistreatment. market power is typically defined as the ability to profitably alter prices away from competitive l...

Rubinstein and Wolinsky (1990) show that a simple homogeneous market with exogenous matching has a continuum of (non-competitive) perfect equilibria; however, the unique Markov perfect equilibrium of this model is competitive. By contrast, in the more general case of heterogeneous markets, even the Markov property is not enough to guarantee the perfectly competitive outcome. We define a market ...

This paper studies a market game under uncertainty in which agents may submit multiple limit and market orders. When agents know their preferences at all states, the competitive equilibrium can be supported as a Nash equilibrium of the market game, that is, agents behave as if they were price takers. Therefore, if the associated competitive economy has a fully revealing rational expectations eq...

Abstract Economists have often viewed the adoption of artificial intelligence (AI) as a standard process innovation where we expect that efficiency will drive in competitive markets. This paper models AI based on recent advances machine learning allow firms to engage better prediction. Focusing prediction demand, it is demonstrated complement variable inputs whose levels are altered directly by...

This paper uses laboratory methods to evaluate determinants of supra-competitive pricing. The experiment involves three treatments, each with the same market supply, demand, and competitive price. In the baseline treatment, capacity is divided among five sellers so that the competitive price is a Nash equilibrium. Market power is created in a second treatment by reallocating capacity among the ...