Trade fragmentation and coordination in strategic market games (Q5956285)

The authors analyze the traders incentive to participate on different markets and the validity of the law of one price in the context of three strategic market games with multiple trading posts. In bilateral oligopolies, where traders have corner endowments in one commodity, all agents participate in all the markets. The law of one price holds in bilateral oligopolies and in the buy-or-sell market game, where equilibrium strategies are locally unique. The law of one price fails when traders can simultaneously buy and sell on every market and the set of equilibrium prices generically has the same dimension as the number of active markets. See also the article by \textit{F. Bloch} and \textit{S. Ghosal} [J. Econ. Theory 74, 368-374 (1997; Zbl 0887.90050)].