Multi-product supply function equilibria
We solve for Nash equilibria in a procurement auction with two heterogeneous divisible goods. There are (dis)economies of scope in production and goods could be substitutes or complements for the procurer. Before demand is realized, each firm offers a vector of supply functions where supply of a good depends on the prices of both goods, which is similar to the product-mix auction and electricity markets with complex bids. We show that outcomes are not influenced by bundling of the goods. For quadratic costs and linear demand, we can use this property to transform the multi-product problem into an equivalent set of separated single-good markets, which can be analysed independently. We show that eigenvalues of Lerner and pass-through tensors are fundamental measures of multi-product market performance that do not depend on bundling. We also derive welfare for the linear equilibrium.

Please sign up for meetings here: docs.google.com/spreadsheets/d/1UnW-JOf7vD54h9QKWYWXQS1Wc-H4oP7nbywDdeJvr4o/edit#gid=0
Date: 8 November 2019, 14:15 (Friday, 4th week, Michaelmas 2019)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room A
Speaker: Par Holmberg (Research institute of Industrial Economics (IFN))
Organising department: Department of Economics
Part of: Nuffield Economic Theory Seminar
Booking required?: Not required
Audience: Members of the University only
Editor: Melis Clark