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Noncooperative Price Taking in Large Dynamic Markets

Green, Edward J. (1982) Noncooperative Price Taking in Large Dynamic Markets. In: Noncooperative Approaches to the Theory of Perfect Competition. Academic Press , New York, NY, pp. 37-64. ISBN 978-0-12-476750-8. http://resolver.caltech.edu/CaltechAUTHORS:20170712-154124355

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Abstract

This chapter discusses noncooperative price taking in large dynamic markets. Cournot's proposition that large markets are competitive is reconciled with the possibility of equilibrium involving strategic interaction among firms. It is shown that, except when extraordinarily precise information is available, firms in a market with many agents are not visible enough for the equilibrium described by Stigler to be sustained. This result is proved by studying two formal representations of markets with many agents. One of these representations involves initially choosing a particular market, with finitely many participants, and then forming a sequence of increasingly large markets by adjoining at each stage a new copy of the original one. The result of this procedure is called a sequence of replica markets. All of the markets in the sequence have the same statistical characteristics, the ratio of firms to consumers is constant, and they all share the same competitive market-clearing prices. The other representation of markets with many agents exploits the fact that, if counting measure on the set of agents in a market is normalized to make the set into a probability space, then a description of agents' characteristics and actions is mathematically a random vector defined on the sample space of agents.


Item Type:Book Section
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https://doi.org/10.1016/B978-0-12-476750-8.50007-5DOIArticle
http://www.sciencedirect.com/science/article/pii/B9780124767508500075PublisherArticle
Additional Information:© 1982 Academic Press, Inc. Received March 21, 1979. Financial support for this research was provided through a grant from the Sloan Foundation to the Princeton University Economics Department. I would like to express my appreciation to Edward Prescott, who drew my attention to the problem studied here. I am grateful to Robert Anderson and Hugo Sonnenschein for discussions and suggestions which have greatly improved the paper.
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Alfred P. Sloan FoundationUNSPECIFIED
Record Number:CaltechAUTHORS:20170712-154124355
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20170712-154124355
Official Citation:EDWARD J. GREEN, Noncooperative Price Taking in Large Dynamic Markets, In Noncooperative Approaches to the Theory of Perfect Competition, edited by Andreu Mas-Colell,, Academic Press, 1982, Pages 37-64, ISBN 9780124767508, https://doi.org/10.1016/B978-0-12-476750-8.50007-5.
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79032
Collection:CaltechAUTHORS
Deposited By: Tony Diaz
Deposited On:13 Jul 2017 02:43
Last Modified:13 Jul 2017 02:43

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