Vega-Redondo (1997) showed that imitation leads to the Walrasian outcome in Cournot Oligopoly. We generalize his result to aggregative quasi-submodular games. Examples are the Cournot Oligopoly, Bertrand games with differentiated complementary products, CommonPool Resource games, Rent-Seeking games and generalized Nash-Demand games. JEL-Classifications: C72, D21, D43, L13.

This paper extends the Cournot and Bertrand models of strategic interaction between firms by assuming that managers are not only profit maximizers, but also have preferences for reciprocity or are averse to inequity. A reciprocal manager responds to unkind behavior of rivals with unkind actions, while at the same time, it responds to kind behavior of rivals with kind actions. An inequity averse...

Recently, many cities have launched new rail transit lines. Once these new rail transit lines start commercial operation, they will play important roles as competitors to conventional bus services. In this paper, the effects of nationalization on equilibria have been studied in a mixed duopoly public transport market, in which one publicly-owned rail transit operator competes with one private b...

Bertrand competition under decreasing returns involves a wide interval of pure strategy Nash equilibrium prices. We first present results of experiments in which two, three and four identical firms repeatedly interact in this environment. More firms lead to lower average prices. However, prices remain substantially above the Walrasian level. With more than two firms the predominant market price...

We analyze Bertrand’s price competition in a homogenous good market with a fixed cost and an increasing marginal cost (i.e., with variable returns to scale). If the fixed cost is avoidable, we show that the non-subadditivity of the cost function at the output corresponding to the oligopoly break-even price, denoted by D(pL(n)), is sufficient to guarantee that the market supports an equilibrium ...

We look at the impact of a binding minimum wage on labor market outcomes and welfare distributions in both partial and general equilibrium models of matching and bargaining a currentlyemployed individual can meet other potential employers (on-the-job search). In analyzing and estimating the model, we use two different specifications of the Nash bargaining problem. In one, firms engage in a Bert...

Product differentiation is well established as being the key source of the cereal industry’s high price-cost margins. However, there is little consensus as to whether pricing collusion is also a source of profitability, and indeed, whether price even serves as a strategic variable in this industry. This paper seeks to resolve this debate by determining whether cereal firms strategically interac...

Heterogeneous duopolies with product differentiation and isoelastic price functions are examined in which one firm is quantity setter and the other is price setter. The reaction functions and the CournotBertrand (CB) equilibrium are first determined. It is shown that the best response dynamics with continuous time scales and without time delays is always locally asymptotically stable. This stab...

We present a novel approach to analyzing models of price competition. By realizing price competition as a class of all-pay contests, we are able to generalize the models in which pricing behavior can be characterized, accommodating convex (possibly asymmetric) cost structures and general demand rationing schemes. Using this approach, we identify necessary and sufficient conditions for a pure st...

We introduce a small cost of leading (small gain from waiting) in the two-player action commitment game formulated by Hamilton and Slutsky (1990). We investigate a quantity competition model with linear demand and constant marginal costs. We find that there exists a unique randomized strategy equilibrium as long as the leading cost is positive and not too large. The randomized strategy equilibr...