Markov perfect equilibria in industries with complementarities (Q5940588)

This paper considers an analysis of Markov equilibria in industries. The environment has the following features: 1. Each firm is a price setter, selecting a stochastic process for the price of the good it produces. 2. Each firm produces using a technology that is perturbed by a firm specific shock. 3. The demand for each firm product depends on the entire distribution or price in the industry. 4. Each firm faces costs of price adjustment. The author provides the existence and computation of Markov perfect equilibria in games with a ``monotone'' structure. By use of the Lebesgue measure theory, he defines transition operators \(Tg: \Phi_Q\to \Phi_Q\). Having proved that \(Tg\) has fixed point, the existence of an equilibrium was established.