We consider a price competition between two sellers of perfect-complement goods. Each seller posts a price for the good it sells, but the demand is determined according to the sum of prices. This is a classic model by Cournot (1838), who showed that in this setting a monopoly that sells both goods is better for the society than two competing sellers. We show that non-trivial pure Nash equilibria always exist in this game. We also quantify Cournot's observation with respect to both the optimal welfare and the monopoly revenue. We then prove a series of mostly negative results regarding the convergence of best response dynamics to equilibria in such games.
|Original language||American English|
|Title of host publication||44th International Colloquium on Automata, Languages, and Programming, ICALP 2017|
|Editors||Anca Muscholl, Piotr Indyk, Fabian Kuhn, Ioannis Chatzigiannakis|
|Publisher||Schloss Dagstuhl- Leibniz-Zentrum fur Informatik GmbH, Dagstuhl Publishing|
|State||Published - 1 Jul 2017|
|Event||44th International Colloquium on Automata, Languages, and Programming, ICALP 2017 - Warsaw, Poland|
Duration: 10 Jul 2017 → 14 Jul 2017
|Name||Leibniz International Proceedings in Informatics, LIPIcs|
|Conference||44th International Colloquium on Automata, Languages, and Programming, ICALP 2017|
|Period||10/07/17 → 14/07/17|
Bibliographical notePublisher Copyright:
© Moshe Babaioff, Liad Blumrosen, and Noam Nisan;.
- Game theory
- Price of stability