Prices, Delay, and the Dynamics of Trade
AbstractWe characterize the dynamics of trading patterns and market composition when trade is bilateral, finding a trading partner is costly, prices are determined by bargaining, and preferences are private information. We show that equilibrium is inefficient and exhibits delay as sellers price discriminate between buyers with different values. As frictions vanish, transaction prices are asymptotically competitive and the welfare loss of inefficient trading approaches zero, even though the trading patterns continue to be inefficient and delay persists.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Theory.
Volume (Year): 104 (2002)
Issue (Month): 2 (June)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/622869
Other versions of this item:
- Moreno, Diego & Wooders, John, . "Prices, delay and the dynamics of trade," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/7217, Universidad Carlos III de Madrid.
- Moreno, Diego & Wooders, John, . "Prices, delay, and the dynamics of trade," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/4395, Universidad Carlos III de Madrid.
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- D4 - Microeconomics - - Market Structure and Pricing
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