Demand uncertainty, incomplete markets, and the optimality of rationing
Article Abstract:
The utility of the incomplete markets, general equilibrium method lies in its ability to recognize random arrival of consumers to commodity markets as an incomplete markets event. It resolves the paradox of many firms setting prices without considering demand, preferring to sell out and ration instead of adjusting the price. An evaluation of the incomplete markets approach shows that price-fixing with rationing is optimal when consumers buy either zero or one unit of the commodity and when consumers cannot make a commitment to pay unless they receive a unit.
Publication Name: Journal of Economic Theory
Subject: Economics
ISSN: 0022-0531
Year: 1996
User Contributions:
Comment about this article or add new information about this topic:
Informed trading and the 'leakage' of information
Article Abstract:
The effect of 'leakage' of information or private information on information acquisition and revelation is examined. Conclusions are drawn by using the Shapley-Shubik market game framework.
Publication Name: Journal of Economic Theory
Subject: Economics
ISSN: 0022-0531
Year: 2003
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Growth under uncertainty with experimentation. Human capital and the future of transition economies. The politics of co-optation
- Abstracts: Intertemporal speculation, shortages and the political economy of price reform. Signalling, wage controls and monetary disinflation policy
- Abstracts: Large market games with demand uncertainity. When to fire a CEO: Optimal termination in dynamic contracts. Quality undersupply and oversupply
- Abstracts: Diagnostics for evaluating the value and rationality of economic forecasts. A note on musgrave asymmetrical trend-cycle filters
- Abstracts: Aggregating ordinal probabilities on finite sets. A quasiordering is the intersection of orderings. Efficient strategy-proof exchange and minimum consumption guarantees