The outcome of competitive equilibrium rules in buyer–seller markets when the agents play strategically
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We analyze the two-stage games induced by competitive equilibrium rules for the buyer–seller market of Shapley and Shubik (Int J Game Theory 1:111–130, 1972). In these procedures, first sellers and then buyers report their valuation and the outcome is determined by a competitive equilibrium outcome for the market reported by the agents. We provide results concerning buyers and sellers’ equilibrium strategies. In particular, our results point out that, by playing first, sellers are able to instigate an outcome that corresponds to the sellers’ optimal competitive equilibrium allocation for the true market.
KeywordsAssignment game Competitive price Optimal matching Competitive rule
JEL ClassificationC78 D78
We thank three reviewers and an Associate Editor for very helpful comments. Marilda Sotomayor is a research fellow at CNPq-Brazil. David Pérez-Castrillo is a fellow of MOVE and CESIfo. He acknowledges financial support from the Ministerio de Ciencia y Tecnología (ECO2015-63679-P), Generalitat de Catalunya (2014SGR-142), the Severo Ochoa Programme for Centres of Excellence in R&D (SEV-2015-0563) and ICREA Academia.
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