Arbitrage Equilibria in Large Games with Many Commodities

Waseem Toraubally

doi:10.1016/j.econlet.2019.03.004

Arbitrage Equilibria in Large Games with Many Commodities

Waseem Toraubally

Research output: Contribution to journal › Article › peer-review

2 Citations (Scopus)

150 Downloads (Pure)

Abstract

Can identical goods sell at different prices in identical markets when people are perfectly mobile? We provide a formal account of strategic behaviour in large games with many commodities, and exhibit how it drives price dispersion at equilibrium. Interactions between agents are modelled using a Shapley-Shubik market game. We demonstrate the failure of the law of one price in this setup through a robust counterexample. The proposed model, and our findings, constitute an alternative and plausible explanation to some "anomalies" which routinely appear in a wide array of fields, ranging from banking, business economics, to international, and labour economics.

Original language	English
Pages (from-to)	24-28
Number of pages	5
Journal	Economics Letters
Volume	179
Early online date	12 Mar 2019
DOIs	https://doi.org/10.1016/j.econlet.2019.03.004
Publication status	Published - Jun 2019

Bibliographical note

NOTICE: this is the author’s version of a work that was accepted for publication in Economics Letters. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Economics Letters, [179] (2019)] DOI:
10.1016/j.econlet.2019.03.004
© 2019, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International
http://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

Oligopoly
Infinite-dimensional commodity space
Arbitrage
Strategic behaviour

ASJC Scopus subject areas

Economics and Econometrics
Finance

Access to Document

10.1016/j.econlet.2019.03.004

Post-PrintAccepted author manuscript, 744 KBLicence: CC BY-NC-ND

Cite this

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title = "Arbitrage Equilibria in Large Games with Many Commodities",

abstract = "Can identical goods sell at different prices in identical markets when people are perfectly mobile? We provide a formal account of strategic behaviour in large games with many commodities, and exhibit how it drives price dispersion at equilibrium. Interactions between agents are modelled using a Shapley-Shubik market game. We demonstrate the failure of the law of one price in this setup through a robust counterexample. The proposed model, and our findings, constitute an alternative and plausible explanation to some {"}anomalies{"} which routinely appear in a wide array of fields, ranging from banking, business economics, to international, and labour economics.",

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AB - Can identical goods sell at different prices in identical markets when people are perfectly mobile? We provide a formal account of strategic behaviour in large games with many commodities, and exhibit how it drives price dispersion at equilibrium. Interactions between agents are modelled using a Shapley-Shubik market game. We demonstrate the failure of the law of one price in this setup through a robust counterexample. The proposed model, and our findings, constitute an alternative and plausible explanation to some "anomalies" which routinely appear in a wide array of fields, ranging from banking, business economics, to international, and labour economics.

KW - Oligopoly

KW - Infinite-dimensional commodity space

KW - Arbitrage

KW - Strategic behaviour

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JO - Economics Letters

JF - Economics Letters

ER -

Arbitrage Equilibria in Large Games with Many Commodities

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

Access to Document

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