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A note on price-taking and price-making behaviours in pure exchange economies

Author

Listed:
  • Ludovic A. Julien

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Fabrice Tricou

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper explores the rationale of price-taking and price-making behaviours in the context of Walrasian and Cournotian pure exchange economies. Beside the influence of the number of agents, we underline the role of the structure of preferences in the definition and in the working of market power. Through three equilibrium variations of the same basic economy, we obtain several results about price manipulation, about asymptotic identifications for large economies and for degenerate preferences, and about welfare comparisons. Perfect competition does not only correspond to the case of large economies, but may also concern economies where fundamental market powers are more or less equivalent.

Suggested Citation

  • Ludovic A. Julien & Fabrice Tricou, 2006. "A note on price-taking and price-making behaviours in pure exchange economies," Working Papers hal-04138521, HAL.
    • Handle: RePEc:hal:wpaper:hal-04138521
    Note: View the original document on HAL open archive server: https://hal.science/hal-04138521
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    References listed on IDEAS

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    1. Codognato, Giulio & Gabszewicz, Jean J, 1993. "Cournot-Walras Equilibria in Markets with a Continuum of Traders," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(3), pages 453-464, July.
    2. Jean Gabszewicz & Giulio Codognato, 1991. "Équilibres de Cournot-Walras dans une économie d'échange," Revue Économique, Programme National Persée, vol. 42(6), pages 1013-1026.
    3. Gerard Debreu, 1963. "On a Theorem of Scarf," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 30(3), pages 177-180.
    4. Shapley, Lloyd S & Shubik, Martin, 1977. "Trade Using One Commodity as a Means of Payment," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 937-968, October.
    5. Jean J. Gabszewicz, 2002. "Strategic Multilateral Exchange," Books, Edward Elgar Publishing, number 756.
    6. Roberts, Donald John & Postlewaite, Andrew, 1976. "The Incentives for Price-Taking Behavior in Large Exchange Economies," Econometrica, Econometric Society, vol. 44(1), pages 115-127, January.
    7. Joseph M. Ostroy & Louis Makowski, 2001. "Perfect Competition and the Creativity of the Market," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 479-535, June.
    8. Mas-Colell, Andreu (ed.), 1982. "Noncooperative Approaches to the Theory of Perfect Competition," Elsevier Monographs, Elsevier, edition 1, number 9780124767508.
    9. repec:cor:louvrp:-964 is not listed on IDEAS
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    Keywords

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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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