TY  - JOUR
AU  - Acemoglu,Daron
AU  - Ozdaglar,Asuman
TI  - Competition and Efficiency in Congested Markets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11201
PY  - 2005
Y2  - March 2005
UR  - http://www.nber.org/papers/w11201
L1  - http://www.nber.org/papers/w11201.pdf
N1  - Author contact info:
Daron Acemoglu
Department of Economics
MIT, E52-380B
50 Memorial Drive
Cambridge, MA  02142-1347
Tel: 617/253-1927
Fax: 617/253-1330
E-Mail: daron@mit.edu

Asuman Ozdaglar
Dept of Electrical Engineering
and Computer Science
Massachusetts Institute of Technology
77 Massachusetts Ave, E40-130
Cambridge, MA 02139
E-Mail: asuman@mit.edu
AB  - 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.
ER  -