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Trade in bilateral oligopoly with endogenous market formation

By Alex Dickson and Roger Hartley

Abstract

We study a strategic market game in which traders are endowed with both a good and money and can choose whether to buy or sell\ud the good. We derive conditions under which a non-autarkic equilibrium exists and when the only equilibrium is autarky. Autarky is ‘nice’ (robust to small perturbations in the game) when it is the only equilibrium,\ud and ‘very nice’ (robust to large perturbations) when no gains from trade exist. We characterize economies where autarky is nice but not very nice; that is, when gains from trade exist and yet no trade\ud takes place

Topics: Bilateral oligopoly, strategic market game, trade
Publisher: University of Manchester
Year: 2011
OAI identifier: oai:repo.sire.ac.uk:10943/254
Provided by: SIRE

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