Prices, delay and the dynamics of trade
AbstractWe characterize trading patterns and their dynamics in a market in which trade is bilateral, finding a trading partner is costly, prices are determined by bargaining, and preferences are private information. We also determine how the trading pattern depends on the market composition. Our analysis reveals that market equilibria may be inefficient and may exhibit delay. As the market becomes frictionless the welfare loss due to inefficiency vanishes; delay persists, however, and in this respect frictionless markets are not competitive.
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Bibliographic InfoPaper provided by Universidad Carlos III de Madrid in its series Open Access publications from Universidad Carlos III de Madrid with number info:hdl:10016/7217.
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Trade dynamics; Matching; Bargaining; Delay; Asymmetric information; Decentralized trade;
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:10016/4395, 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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