Condorelli, Daniele and Galeotti, Andrea (2012) Endogenous Trading Networks. Working Paper. University of Essex, Department of Economics, Economics Discussion Papers, Colchester. (Unpublished)
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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) |
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| Uncontrolled Keywords: | HB; |
| Subjects: | H Social Sciences > HB Economic Theory |
| Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of |
| SWORD Depositor: | Elements |
| Depositing User: | Elements |
| Date Deposited: | 17 Jul 2012 12:26 |
| Last Modified: | 15 Jan 2022 00:39 |
| URI: | http://repository.essex.ac.uk/id/eprint/2871 |
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