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Self-Organization of Trade Networks in an Economy with Imperfect Infrastructure

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Author Info

  • Sergei Guriev
  • Igor Pospelov
  • Margarita Shakhova

    ()
    (Computing Center, Russian Academy of Science)

Abstract

A multi-agent model is proposed for the analysis of self- organization of trade networks. The model takes into account time spent on transactions (`` trade distance). It is shown that the same set of traders may generate trade networks of different structures depending on average trade distance. When the latter is small, the market is near-competitive, trade structures are flat. When trade distance is large, the set of traders exhibit monopolistic behavior, traders sell only to rich consumers, trades are rather large. Under medium trade distance a phase transition and complex dynamics are observed, including significant price oscillations, regular bursts of shortages and long chains of traders. Emergence of trader market strategies such as stabilizing wholesale traders and destabilizing speculators is discovered. The model is studied both analytically and via computer simulations.

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Bibliographic Info

Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 1996 with number _022.

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Handle: RePEc:sce:scecf6:_022

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Postal: Department of Econometrics, University of Geneva, 102 Bd Carl-Vogt, 1211 Geneva 4, Switzerland
Web page: http://www.unige.ch/ce/ce96/welcome.html
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  1. Evstigneev,Igor & Taksar,Michael, 1992. "Stochastic equilibria on graphs,I," Discussion Paper Serie A 391, University of Bonn, Germany.
  2. Arial Rubinstein & Asher Wolinsky, 1985. "Equilibrium in a Market with Sequential Bargaining," Levine's Working Paper Archive 623, David K. Levine.
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Cited by:
  1. Tesfatsion, Leigh, 1996. "An Evolutionary Trade Network Game with Preferential Partner Selection," Staff General Research Papers 2047, Iowa State University, Department of Economics.
  2. Leigh Tesfatsion, 1998. "Gale-Shapley Matching in an Evolutionary Trade Network Game," Game Theory and Information 9805004, EconWPA, revised 26 Jul 1998.
  3. Leigh TESFATSION, 1995. "How Economists Can Get Alife," Economic Report 37, Iowa State University Department of Economics.

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