NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Competition and Efficiency in Congested Markets

Daron Acemoglu, Asuman Ozdaglar

NBER Working Paper No. 11201
Issued in March 2005
NBER Program(s):   EFG   LS

We study the efficiency of oligopoly equilibria 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. This bound is tight even when the number of routes and oligopolists is arbitrarily large. We also study the efficiency properties of mixed strategy equilibria.

download in pdf format
   (397 K)

email paper

This paper is available as PDF (397 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w11201

Published: Acemoglu, Daron and Asuman Ozdaglar. "Competition and Efficiency in Congested Markets." Mathematics of Operations Research 32 (February 2007): 1-31.

Users who downloaded this paper also downloaded these:
Acemoglu, Ozdaglar, and Tahbaz-Salehi w16516 Cascades in Networks and Aggregate Volatility
Mairesse and Greenan w7028 Using Employee Level Data in a Firm Level Econometric Study
Acemoglu, Bimpikis, and Ozdaglar w14408 Experimentation, Patents, and Innovation
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us