Author, as appears in the article.: Bayona, Anna; Manzano, Carolina
Department: Economia
URV's Author/s: Manzano Tovar, Carolina
Keywords: Auctions Cursed equilibrium Economie Equilibrium Generic existence Information Market power Market quality Overconfidence Price Rational-expectations Speculation Total surplu
Abstract: We study a market with sellers that compete in supply functions, face an elastic demand, and have imperfect cost information. In our model, sellers neglect some informational content of the price. In order to capture this feature, we use the cursed expectations equilibrium concept. In the linear- quadratic-normal framework, this paper presents conditions under which the unique equilibrium in linear supply functions exists and derives some comparative statics results. Compared to markets with fully rational sellers, we find that market power and the expected price-cost margin are lower; the price reaction to private information can be higher due to imperfect competition and demand elasticity; expected profits can be greater; and expected total surplus can also increase if the efficiency gains from reduced market power outweigh the losses from cursedness.
Thematic Areas: Business and management Ciencias sociales Economia Economics Economics and econometrics Interdisciplinary research in the social sciences Matemática / probabilidade e estatística
licence for use: https://creativecommons.org/licenses/by/3.0/es/
Author's mail: carolina.manzano@urv.cat
Author identifier: 0000-0001-7160-0562
Record's date: 2024-12-07
Papper version: info:eu-repo/semantics/publishedVersion
Papper original source: Journal Of Economic Theory. 222 105935-
APA: Bayona, Anna; Manzano, Carolina (2024). Competition in schedules with cursed traders. Journal Of Economic Theory, 222(), 105935-. DOI: 10.1016/j.jet.2024.105935
Licence document URL: https://repositori.urv.cat/ca/proteccio-de-dades/
Entity: Universitat Rovira i Virgili
Journal publication year: 2024
Publication Type: info:eu-repo/semantics/article
Repositori URV