Market Price Mechanisms and Stackelberg General Equilibria: An Example

Abstract

This paper considers Stackelberg competition in a general equilibrium framework with a productive sector. The working of market power and the configurations of strategic interactions are complexified by the presence of a leader. Two market price mechanisms are studied: one is associated with the Stackelberg-Walras equilibrium and the other is linked to the Stackelberg-Cournot equilibrium. Throughout the example of a two commodity economy, several results are obtained about equilibria mergings and about welfare comparisons.

Cobb-Douglas Preferences and Pollution in a Bilateral Oligopoly Market

“…In this paper, we investigate the consequences of asymmetric Cobb-Douglas preferences on equilibrium strategies and pollution emissions level, in a bilateral oligopoly model with Stackelberg competition. To this end, we extend Julien and Tricou (2012)'s bilateral oligopoly model based on Gabszewicz and Michel (1997) by introducing a polluting good, and assuming asymmetric preferences. In this framework, we study two strategic equilibria in an exchange economy with production and pollution emissions.…”

“…The oligopoly models with a finite number of traders were introduced by Gabszewicz and Michel (1997) and pursued by Bloch and Ghosal (1997), Bloch and Ferrer (2001), Dickson and Hartley (2008), Julien and Tricou (2012). In these models, both sides of the market are linked by a price mechanism.…”

“…This mechanism was developed by Shapley and Shubik (1977) and refined by Sahi and Yao (1989) and Amir et al (1990). Our model is closely related to Julien and Tricou (2012)'s who assumes that all traders have the same preferences which can be represented by the same log linear utility function. We relax this assumption by considering that agents located on both sides of the market exhibit different preferences which are adequately captured by Cobb-Douglas utility functions.…”

Stackelberg strategies for wastewater management

“…Achieving a strategy that is good for the upper entity (leader) and the subordinate (follower) leads us to the search of Stackelberg strategies [9]. The use of this type of strategies is common in the field of the economy (see, for instance, [10] and the references therein), but its application to multi-objective optimal control problems governed by partial differential equations has bee, until now, very limited (as far as the authors know, the pioneering works [11,12] are still basic references). Showing an application of these techniques within this context is one of the contributions to be sought with this article.…”

Stackelberg-Cournot and Cournot Equilibria in a Mixed Markets Exchange Economy

“…Codognato [11] studies the equivalence between the Cournot-Walras equilibrium and the CE, while Codognato [12] compares two Cournot-Nash equilibrium models. In this note, we compare the CE and the Stackelberg-Cournot equili-brium (SCE) defined for finite economies in Julien and Tricou [13,14]. From the benchmark of strategic market games, the SCE concept inserts Stackelberg competition into interrelated markets.…”