Research Repository

Endogenous Trading Networks

Condorelli, Daniele and Galeotti, Andrea (2012) Endogenous Trading Networks. Working Paper. University of Essex, Department of Economics, Economics Discussion Papers, Colchester. (Unpublished)

[img]
Preview
Text
dp705.pdf

Download (395kB) | Preview

Abstract

We investigate the effects of a class of trading protocols on the architecture and efficiency properties of endogenously formed trading networks. In our model, the opportunity to sell valuable objects occurs randomly to different individuals. A sale can only be realized if two individuals are connected, directly or indirectly, but forming and maintaining a trading relation is a costly investment. When the outcome of trading is efficient and provides no intermediation rents, a tension between equilibrium and efficient networks emerges when the cost of forming a link is at an intermediate level. There are two types of inefficiencies. Either all equilibrium networks are under- connected when compared to efficient networks, or a multiplicity of equilibriam may exist and agents may fail to coordinate on the efficient equilibrium network

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: HB;
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 17 Jul 2012 12:26
Last Modified: 06 Feb 2019 12:15
URI: http://repository.essex.ac.uk/id/eprint/2871

Actions (login required)

View Item View Item