Abstract
This paper introduces a new class of market games featuring multiple posts per commodity, in which trading posts are privately owned. It is demonstrated via three robust counterexamples, that in this setting the law of one price fails, thus showing, contrary to longstanding belief in the literature, that price dispersion in large market games is extremely robust. Most importantly, it is established that even in economies with a continuum of small agents and infinitely many atoms (all of whom can arbitrage prices if they so wish), and an infinite number of markets per commodity, the set of equilibria—and the resulting market structure—is influenced, both by strategic behaviour, and private ownership of posts.
| Original language | English |
|---|---|
| Pages (from-to) | 13-26 |
| Number of pages | 14 |
| Journal | Journal of Mathematical Economics |
| Volume | 78 |
| Early online date | 10 Jul 2018 |
| DOIs | |
| Publication status | Published - Oct 2018 |
Bibliographical note
NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Mathematical Economics. 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 Journal of Mathematical Economics, Vol 78 (2018) DOI: 10.1016/j.jmateco.2018.06.007© 2017, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/
Keywords
- Large economies
- Arbitrage equilibria
- Law of one price