The Outcome of Competitive Equilibrium Rules In Buyer-seller Markets When the Agents Play Strategically

• Authors: David Pérez-Castrillo.
• BSE Working Paper: 110353 | February 16
• Keywords: assignment game , competitive price , optimal matching , competitive rule
• JEL codes: C78, D78
• assignment game
• competitive price
• optimal matching
• competitive rule

We analyze the two-stage games induced by competitive equilibrium rules for the buyer-seller market of Shapley and Shubik (1972). In these procedures, first sellers and
then buyers report their valuation and the outcome is determined by a competitive equilibrium outcome for the market reported by the agents. We provide results concerning buyers and sellers’ equilibrium strategies. In particular, our results point out that, by playing first, sellers are able to instigate an outcome that corresponds to the sellers’ optimal competitive equilibrium allocation for the true market.