Artikel
Efficiency and marginal cost pricing in dynamic competitive markets with friction
This paper examines a dynamic general equilibrium model with supply friction. With or without friction, the competitive equilibrium is efficient. Without friction, the market price is completely determined by the marginal production cost. If friction is present, no matter how small, then the market price fluctuates between zero and the "choke-up" price, without any tendency to converge to the marginal production cost, exhibiting considerable volatility. The distribution of the gains from trading in an efficient allocation may be skewed in favor of the supplier, although every player in the market is a price taker.
- Language
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Englisch
- Bibliographic citation
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Journal: Theoretical Economics ; ISSN: 1555-7561 ; Volume: 5 ; Year: 2010 ; Issue: 2 ; Pages: 215-239 ; New Haven, CT: The Econometric Society
- Classification
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Wirtschaft
Market Structure, Pricing, and Design: Perfect Competition
Exchange and Production Economies
- Subject
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Dynamic general equilibrium model with supply friction
choke-up price
marginal production cost
welfare theorems
- Event
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Geistige Schöpfung
- (who)
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Cho, In-Koo
Meyn, Sean P.
- Event
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Veröffentlichung
- (who)
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The Econometric Society
- (where)
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New Haven, CT
- (when)
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2010
- DOI
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doi:10.3982/TE324
- Handle
- Last update
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10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Artikel
Associated
- Cho, In-Koo
- Meyn, Sean P.
- The Econometric Society
Time of origin
- 2010
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