Selling Complementary Goods: Dynamics, Efficiency and Revenue

Moshe Babaioff; Liad Blumrosen; Noam Nisan

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arXiv · 1706.00219

Selling Complementary Goods: Dynamics, Efficiency and Revenue

Moshe Babaioff·Liad Blumrosen·Noam Nisan

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Abstract

We consider a price competition between two sellers of perfect-complement goods. Each seller posts a price for the good it sells, but the demand is determined according to the sum of prices. This is a classic model by Cournot (1838), who showed that in this setting a monopoly that sells both goods is better for the society than two competing sellers. We show that non-trivial pure Nash equilibria always exist in this game. We also quantify Cournot's observation with respect to both the optimal welfare and the monopoly revenue. We then prove a series of mostly negative results regarding the convergence of best response dynamics to equilibria in such games.

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BibTeX RIS

Moshe Babaioff, Liad Blumrosen, Noam Nisan. 2017-06-01. Selling Complementary Goods: Dynamics, Efficiency and Revenue. https://arxiv.org/abs/1706.00219

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