Demand uncertainty, incomplete markets, and the optimality of rationing

Article Abstract:

The utility of the incomplete markets, general equilibrium method lies in its ability to recognize random arrival of consumers to commodity markets as an incomplete markets event. It resolves the paradox of many firms setting prices without considering demand, preferring to sell out and ration instead of adjusting the price. An evaluation of the incomplete markets approach shows that price-fixing with rationing is optimal when consumers buy either zero or one unit of the commodity and when consumers cannot make a commitment to pay unless they receive a unit.

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Large market games with demand uncertainity

Article Abstract:

Consumers strictly prefer to be on one side of the market and the best responses are unique and a Nash equilibrium to the sell-all game is typically not a Nash equilibrium to the original game, when facing price uncertainty. A stochastic market game with a continuum of consumers and nature selecting the set of active consumers who make bids and offer on (l - 1) spot market trading posts are given also including the proof of existence of type-symmetric Nash equilibrium.

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Informed trading and the 'leakage' of information

Article Abstract:

The effect of 'leakage' of information or private information on information acquisition and revelation is examined. Conclusions are drawn by using the Shapley-Shubik market game framework.

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