Efficiency and marginal cost pricing in dynamic competitive markets with friction

• 成果类型: Article
• 署名作者: Cho, In-Koo; Meyn, Sean P.
• 署名单位: University of Illinois System; University of Illinois Chicago; University of Illinois Chicago Hospital; University of Illinois System; University of Illinois Chicago; University of Illinois Chicago Hospital
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE324
• 发表日期: 2010-05-01
• 页码: 215-239
• 关键词: Dynamic general equilibrium model with supply friction; choke-up price; marginal production cost; welfare theorems

摘要

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.