Competition, Collusion, and Game Theory

by Telser,Lester G

• ISBN13: 9780202309255
• ISBN10: 0202309258
• Format: Nonspecific Binding
• Copyright: 2007-07-15
• Publisher: Routledge

Summary

This original, quantitatively oriented analysis applies the theory of the core to define competition in order to describe and deduce the consequences of competitive and non-competitive behavior. Written by one of the world's leading mathematical economists, the book is mathematically rigorous. No other book is currently available giving a game theoretic analysis of competition with basic mathematical tools. Economic theorists have been working on a new and fundamental approach to the theory of competition and market structure, an approach inspired by appreciation of the earlier work of Edgeworth and Bohm-Bawerk and making use of the new tools of the theory of games as developed by von Neumann and Morgenstern. This new approach bases itself on the analysis of competitive behavior and its implications for the characteristics of market equilibrium rather than on assumptions about the characteristics of competitive and monopolistic markets. Its central concept is "the theory of the core of the market," and it is concerned, with the conditions under which markets will or will not achieve the characteristics of uniform prices and welfare optimality. Telser provides a number of insights into the symptoms of competition, when and how competition is bought into play, the mechanisms of competition and collusion, the results of competition and collusion, and the results of competition and collusion for the economy and for the general public. Many misconceptions about the nature of a competitive equilibrium are dispelled. The book is not only a mathematical analysis of core price theory but also contains extensive empirical research in private industry. These empirical findings, from research pursued over several years, enhance understanding of how competition works and of the determinants of the returns to manufacturing industries. Lester G. Telser is professor emeritus of economics at the University of Chicago. He is one of the world's leading mathematical economists; he has been a Visiting Research Fellow, Cowles Foundation for Research in Economics, Yale University; Ford Foundation Faculty Research Fellow; and assistant professor of economics, Iowa State University. In 2005 he received the St. Clair Drake award from Roosevelt University.

Author Biography

Lester G. Telser is professor emeritus of economics at the University of Chicago

Table of Contents

Foreword	p. vii
Acknowledgments	p. xi
Introduction	p. xiii
Applications of Core Theory to Market Exchange	p. 3
Introduction	p. 3
Consumer Surplus and Transferable Utility	p. 4
Some Simple Trading Situations	p. 11
m Owners and n Nonowners	p. 19
The Basic Core Constraints	p. 28
Market Efficiency and Honest Brokers	p. 31
Multiunit Trade	p. 37
Increasing Returns and Public Goods from the Viewpoint of the Core	p. 48
A Brief Historical Note	p. 57
Consumer Surplus	p. 62
Further Applications of Core Theory to Market Exchange	p. 68
Introduction	p. 68
Balanced Collections of Coalitions	p. 70
Empty Cores	p. 78
The Feasibility of Trade	p. 88
Group Rationality with Multiunit Trade	p. 94
Competition and Numbers	p. 104
The Number of Traders and the Emptiness of the Core	p. 108
Conclusions	p. 117
Applications of the Core to Oligopoly	p. 119
Introduction	p. 119
Properties of the Core under Constant Returns	p. 124
The Cournot-Nash Theory of Duopoly for Finite Horizons	p. 131
The Cournot-Nash Theory of Duopoly for Infinite Horizons	p. 142
Theories of Expectations for N Competing Firms	p. 146
Introduction	p. 146
Expectation Models with Quantity as the Policy Variable	p. 149
Expectation Models for Price as the Policy Variable	p. 164
Summary	p. 172
Competition or Collusion?	p. 175
Introduction	p. 175
The Nature of Competition and Collusion	p. 176
Equilibrium with Product Variety Illustrated for Spatial Competition	p. 184
The Costs of Maintaining Collusion	p. 192
Sharing the Collusive Return	p. 206
The Monopoly and Cournot-Nash Equilibria under Dynamic Conditions	p. 218
Introduction	p. 218
Dynamic Demand Relations	p. 221
Some Fundamentals on Optimal Policies	p. 226
The Solvability of Certain Linear Equations	p. 242
Properties of the Cooperative and Noncooperative Dynamic Equilibria	p. 250
Conclusions	p. 272
Estimates of Demand, Price Policy, and the Ratio of Price to Marginal Cost by Brand for Selected Consumer Goods	p. 274
Introduction	p. 274
Estimates of the Demand Relation between Market Share and Prices	p. 283
Estimates of the Relations among Competing Prices	p. 294
Competition in a New Product	p. 299
Conclusions	p. 305
Some Determinants of the Returns to Manufacturing Industries	p. 312
Introduction	p. 312
Description of the Data and Some Simple Summary Statistics	p. 316
Multiple Regression Analysis of the Census Data	p. 324
An Analysis of Employment Turnover in Selected Manufacturing Industries	p. 339
A Brief Survey of Findings by Other Investigators	p. 352
Conclusions	p. 356
Estimation of Payrolls, Annual Earnings, and Employment of Nonproduction Workers	p. 357
Description of the Samples	p. 359
The Two-Digit Industry Effects	p. 361
The Relative Size Distribution of Firms	p. 363
References	p. 367
Name Index	p. 371
Subject Index	p. 372
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