Seminar Details
2025-04-08 (14h) : Multi-product Supply Function Equilibria
At Euler building (room A.002)
Speaker :
Bert Willems (UCLouvain-LIDAM)
Abstract :
We solve for Nash equilibria in a procurement auction with multiple 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 all goods. This is related to the organization of 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 markets, which can be analyzed independently. We show that Lerner
and pass-through tensors can be used to characterize mark-ups and welfare losses
in a multi-product market. Eigenvalues of the tensors are fundamental properties,
as they do not depend on bundling.