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Price suppression stimulation in a local market

Research paper by I. N. Karbovskii, D. B. Shapot

Indexed on: 17 Aug '10Published on: 17 Aug '10Published in: Automation and Remote Control



Abstract

In the paper, we study possible organization of a free multi-agent multi-commodity local market that stimulates price suppression. Market participants (agents) produce different commodities and services sold both in the local and external markets. Agents are interdependent: produce of one agents is a product of industrial consumption of other agents. Agents independently make decisions about shares of a product sent to external and internal markets and about prices that they fix in the local market. Prices of sale and purchase in the external market are fixed and do not depend on actions of the agents of the local market. Commodities of industrial consumption required for the agents cam be bought both in the local or external markets. We study a mechanism of price suppression based on the priority of access to resources granted to more compliant agents. It is shown that at sufficiently soft conditions of “valid competition,” all agents of the local market can obtain an increase in profitability concerning the strategy of purchase and sale in the external market only. Small and low-profitable enterprises obtain the highest relative gains in profitability.