Condorelli, Daniele and Galeotti, Andrea (2012) Endogenous Trading Networks. Working Paper. University of Essex, Department of Economics, Economics Discussion Papers, Colchester. (Unpublished)
Condorelli, Daniele and Galeotti, Andrea (2012) Endogenous Trading Networks. Working Paper. University of Essex, Department of Economics, Economics Discussion Papers, Colchester. (Unpublished)
Condorelli, Daniele and Galeotti, Andrea (2012) Endogenous Trading Networks. Working Paper. University of Essex, Department of Economics, Economics Discussion Papers, Colchester. (Unpublished)
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: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 17 Jul 2012 12:26 |
Last Modified: | 15 Jan 2022 00:39 |
URI: | http://repository.essex.ac.uk/id/eprint/2871 |
Available files
Filename: dp705.pdf