Journal ArticleDOI
The Impact of Oligopolistic Competition in Networks
TLDR
In the traffic assignment problem, first proposed by Wardrop in 1952, commuters select the shortest available path to travel from their origins to their destinations, a generalization of this problem in which competitors, who may control a nonnegligible fraction of the total flow, ship goods across a network is studied.Abstract:
In the traffic assignment problem, commuters select the shortest available path to travel from a given origin to a given destination. This system has been studied for over 50 years since Wardrop's seminal work (1952). Motivated by freight companies, which need to ship goods across the network, we study a generalization of the traffic assignment problem in which some competitors control a non-negligible fraction of the total flow. This type of games, usually referred to as atomic games, readily applies to situations in which some competitors have market power. Other applications include telecommunication network service providers, intelligent transportation systems, and scheduling with flexible machines.Our goal is to determine whether these systems can benefit from some form of coordination or regulation. We measure the quality of the outcome of the game when there is no centralized control by computing the worst-case inefficiency of Nash equilibria. The main conclusion is that although self-interested competitors will not achieve a fully efficient solution from the system's point of view, the loss is not too severe. We show how to compute several bounds for the worst-case inefficiency, which depend on the characteristics of cost functions and the market structure in the game. In addition, building upon the work of Catoni and Pallotino (1991), we show examples in which market aggregation (or collusion) can adversely impact the aggregated competitors, even though their market power increases. For example, all Nash equilibria of an atomic network game may be less efficient than the corresponding Wardrop equilibrium. When the market structure is simple enough, we give an optimization formulation of the Nash equilibrium and prove that this counter-intuitive phenomenon does not arise. Finally, we offer a pricing mechanism that elicits more coordination from the players by reducing the worst-case inefficiency of Nash equilibria.read more
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The Impact of Oligopolistic Competition in Networks
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References
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Book
The Theory of Industrial Organization
TL;DR: The Theory of Industrial Organization as discussed by the authors is the first primary text to treat the new industrial organization at the advanced-undergraduate and graduate level Rigorously analytical and filled with exercises coded to indicate level of difficulty, it provides a unified and modern treatment of the field with accessible models that are simplified to highlight robust economic ideas.
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The Economics of Welfare
TL;DR: Aslanbeigui et al. as mentioned in this paper discussed the relationship between the national dividend and economic and total welfare, and the size of the dividend to the allocation of resources in the economy and the institutional structure governing labor market operations.
Journal ArticleDOI
Charging and rate control for elastic traffic
TL;DR: This paper addresses the issues of charging, rate control and routing for a communication network carrying elastic traffic, such as an ATM network offering an available bit rate service, from which max-min fairness of rates emerges as a limiting special case.