Competition and Efficiency in Congested Markets
Top Cited Papers
- 1 February 2007
- journal article
- Published by Institute for Operations Research and the Management Sciences (INFORMS) in Mathematics of Operations Research
- Vol. 32 (1) , 1-31
- https://doi.org/10.1287/moor.1060.0231
Abstract
We study the efficiency of oligopoly equilibria (OE) in congested markets. The motivating examples are the allocation of network flows in a communication network or of traffic in a transportation network. We show that increasing competition among oligopolists can reduce efficiency, measured as the difference between users’ willingness to pay and delay costs. We characterize a tight bound of 5/6 on efficiency in pure strategy equilibria when there is zero latency at zero flow and a tight bound of 2√2 − 2 with positive latency at zero flow. These bounds are tight even when the numbers of routes and oligopolists are arbitrarily large.Keywords
All Related Versions
This publication has 34 references indexed in Scilit:
- Price Competition in Communication NetworksSSRN Electronic Journal, 2005
- How bad is selfish routing?Journal of the ACM, 2002
- Optimization flow control. I. Basic algorithm and convergenceIEEE/ACM Transactions on Networking, 1999
- Rate control for communication networks: shadow prices, proportional fairness and stabilityJournal of the Operational Research Society, 1998
- Achieving network optima using Stackelberg routing strategiesIEEE/ACM Transactions on Networking, 1997
- Congestion Models of CompetitionThe American Naturalist, 1996
- Competitive routing in multiuser communication networksIEEE/ACM Transactions on Networking, 1993
- The Incentives for Price-Taking Behavior in Large Exchange EconomiesEconometrica, 1976
- A class of games possessing pure-strategy Nash equilibriaInternational Journal of Game Theory, 1973
- ROAD PAPER. SOME THEORETICAL ASPECTS OF ROAD TRAFFIC RESEARCH.Proceedings of the Institution of Civil Engineers, 1952