A variational principle, coupled fixed points and market equilibrium

We present a possible kind of generalization of the notion of ordered pairs of cyclic maps and coupled fixed points and its application in modelling of equilibrium in oligopoly markets. We have obtained sufficient conditions for the existence and uniqueness of coupled fixed in complete metric spaces. We illustrate one possible application of the results by building a pragmatic model on competition in oligopoly markets. To achieve this goal, we use an approach based on studying the response functions of each market participant, thus making it possible to address both Cournot and Bertrand industrial structures with unified formal method.We show that whenever the response functions of the two players are identical, then the equilibrium will be attained at equal levels of production and equal prices. The response functions approach makes it also possible to take into consideration different barriers to entry. By fitting to the response functions rather than the profit maximization of the payoff functions problem we alter the classical optimization problem to a problem of coupled fixed points, which has the benefit that considering corner optimum, corner equilibrium and convexity condition of the payoff function can be skipped.

Existence, Uniqueness and Stability of Market Equilibrium in Oligopoly Markets

In this paper we build a pragmatic model on competition in oligopoly markets. To achieve this goal, we use an approach based on studying the response functions of each market participant, thus making it possible to address both Cournot and Bertrand industrial structures with a unified formal method. In contrast to the restrictive theoretical constructs of duopoly equilibrium, our study is able to account for real-world limitations like minimal sustainable production levels and exclusive access to certain resources. We prove and demonstrate that by using carefully constructed response functions it is possible to build and calibrate a model that reflects different competitive strategies used in extremely concentrated markets. The response functions approach makes it also possible to take into consideration different barriers to entry. By fitting to the response functions rather than the profit maximization of the payoff functions problem we alter the classical optimization problem to a problem of coupled fixed points, which has the benefit that considering corner optimum, corner equilibria and convexity condition of the payoff function can be skipped.

Pricing Network Effects: Competition

We study the practice of influencer marketing in oligopoly markets and its effect on market efficiency. In our model, each consumer is influenced by choices of a subset of other consumers. Firms gather information on consumers’ influence and price discriminate using this information. In equilibrium, firms charge premia/subsidize below-/ above-average-influential consumers; the premia/discounts depend on the strength of network effects and on how much information firms have on consumers’ influence. Influencer marketing leads to inefficient consumer-product matches. Firms’ investments in information are strategic complements, leading to a race for information acquisition that erodes welfare and firms’ profits but increases consumer surplus. (JEL D11, D21, D43, D83, D85, L13, M31)

Analysis of Nutmeg Market Structure in South Aceh District

Market structure can affect performance and behavior in a market. This research aim to analyze the nutmeg market structure in South Aceh District. Indonesia. By looking at the level of competition, market concentration and barriers to market entry. The results of a qualitative study of nutmeg market structure are classified as oligopoly markets while quantitatively by looking at market share, market concentration and market entry barriers from the results obtained by the market are highly concentrated so it is very difficult to enter to the nutmeg market by new traders.