TY - JOUR
T1 - Foundations of dynamic monopoly and the coase conjecture
AU - Gul, Faruk
AU - Sonnenschein, Hugo
AU - Wilson, Robert
N1 - Funding Information:
* This paper was prepared during GUI and Sonnenschein’s visit for a year at the Stanford Business School, which they acknowledge with appreciation. GUI and Sonnenschein acknowledge research support from National Science Foundation grant SES 8510135 to Princeton University; and Wilson, from NSF Grant SES 8308723 and ONR contract NOOOl&799C0685 to Stanford University.
PY - 1986/6
Y1 - 1986/6
N2 - Subgame-perfect equilibria are characterized for a market in which the seller quotes a price each period. Assume zero costs, positive interest rate, continuum of buyers, and some technical conditions. If buyers' valuations are positive then equilibrium is unique, buyers' strategies are stationary, and the price sequence is determinant along the equilibrium path but possibly randomized elsewhere. Otherwise a continuum of stationary equilibria can exist, but at most one with analytic strategies. Coase's conjecture is verified for stationary strategies: reducing the period length drives all prices to zero or the least valuation. Connections to bargaining models are described.
AB - Subgame-perfect equilibria are characterized for a market in which the seller quotes a price each period. Assume zero costs, positive interest rate, continuum of buyers, and some technical conditions. If buyers' valuations are positive then equilibrium is unique, buyers' strategies are stationary, and the price sequence is determinant along the equilibrium path but possibly randomized elsewhere. Otherwise a continuum of stationary equilibria can exist, but at most one with analytic strategies. Coase's conjecture is verified for stationary strategies: reducing the period length drives all prices to zero or the least valuation. Connections to bargaining models are described.
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U2 - 10.1016/0022-0531(86)90024-4
DO - 10.1016/0022-0531(86)90024-4
M3 - Article
AN - SCOPUS:0000518184
SN - 0022-0531
VL - 39
SP - 155
EP - 190
JO - Journal of Economic Theory
JF - Journal of Economic Theory
IS - 1
ER -