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Department of Business and Management Science, Norwegian School of Economics (NHH) Discussion Papers, Department of Business and Management Science, Norwegian School of Economics (NHH)

No 2006/19:
Strategic pricing of commodities

Kurt J÷rnsten () and Jan Ub°e ()

Abstract: In this paper we will consider a setting where a large number of agents are trading commodity bundles. Assuming that agents of the same type have a certain utility attached to each transaction, we construct a statistical equilibrium which in turn implies prices on the different commodities. Our basic question is then the following: Assume that some commodities come out with prices that are socially unacceptable. Is it possible to change these prices systematically if a new type of agents is paid to enter the market? In the paper we will consider explicit examples where this can be done.

Keywords: Agent preferences; efficient markets; statistical equilibria; commodity prices; arbitrageurs; (follow links to similar papers)

JEL-Codes: D40; D50; G10; (follow links to similar papers)

14 pages, December 1, 2006

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