Show simple item record

Authordc.contributor.authorCorrea Haeussler, José 
Authordc.contributor.authorFigueroa González, Nicolás es_CL
Authordc.contributor.authorLederman, Roger es_CL
Authordc.contributor.authorStier Moses, Nicolás E. es_CL
Admission datedc.date.accessioned2014-12-18T01:05:54Z
Available datedc.date.available2014-12-18T01:05:54Z
Publication datedc.date.issued2014
Cita de ítemdc.identifier.citationMath. Program., Ser. A (2014) 146:143–184en_US
Identifierdc.identifier.otherDOI 10.1007/s10107-013-0682-8
Identifierdc.identifier.urihttps://repositorio.uchile.cl/handle/2250/126685
General notedc.descriptionArtículo de publicación ISIen_US
Abstractdc.description.abstractWe study a game that models a market in which heterogeneous producers of perfect substitutes make pricing decisions in a first stage, followed by consumers that select a producer that sells at lowest price. As opposed to Cournot or Bertrand competition, producers select prices using a supply function that maps prices to production levels. Solutions of this type of models are normally referred to as supply function equilibria. We consider a market where producers’ convex costs functions are proportional to each other, depending on the efficiency of each particular producer. We provide necessary and sufficient conditions for the existence of an equilibrium that uses simple supply functions that replicate the cost structure. We then specialize the model to monomial cost functions with exponent q > 0, which allows us to reinterpret the simple supply functions as a markup applied to the production cost.We prove that an equilibrium for the markups exists if and only if the number of producers in the market is strictly larger than 1+q, and if an equilibrium exists, it is unique. The main result for monomials is that the equilibrium nearly minimizes the total production cost when themarket is competitive. The result holds becausewhen there is enough competition, markups are bounded, thus preventing prices to be significantly distorted from costs. Focusing on the case of linear unit-cost functions on the production quantities, we characterize the equilibrium accurately and refine the previous result to establish an almost tight bound on the worst-case inefficiency of equilibria. Finally, we derive explicitly the producers’ best response for series-parallel networks with linear unitcost functions, extending our previous result to more general topologies. We prove that a unique equilibrium exists if and only if the network that captures the market structure is 3-edge-connected. For non-series-parallelmarkets,we provide an example that does not admit an equilibrium on markups.en_US
Patrocinadordc.description.sponsorshipThis research was partially funded by the Millenium Nucleus Information and Coordination in Networks ICM/FIC P10-024F, the Instituto Sistemas Complejos de Ingeniería at Universidad de Chile, by Fondecyt Chile grant 1130671, by the Center for International Business Education and Research at Columbia University, and by Conicet Argentina grant Resolución 4541/12.en_US
Lenguagedc.language.isoenen_US
Publisherdc.publisherSpringeren_US
Type of licensedc.rightsAttribution-NonCommercial-NoDerivs 3.0 Chile*
Link to Licensedc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/cl/*
Keywordsdc.subjectImperfect competitionen_US
Títulodc.titlePricing with markups in industries with increasing marginal costsen_US
Document typedc.typeArtículo de revista


Files in this item

Icon

This item appears in the following Collection(s)

Show simple item record

Attribution-NonCommercial-NoDerivs 3.0 Chile
Except where otherwise noted, this item's license is described as Attribution-NonCommercial-NoDerivs 3.0 Chile