IDEAS home Printed from https://ideas.repec.org/a/cje/issued/v39y2006i3p971-1004.html
   My bibliography  Save this article

Formation of buyer-seller trade networks in a quality-differentiated product market

Author

Listed:
  • Ping Wang
  • Alison Watts

Abstract

We examine the formation of buyer-seller links when exchange can take place only if such a link exists. Sellers produce products of different qualities, and multiple sellers can form a sellers' association to pool their customers setting uniform prices. Buyers form trade links with individual sellers or sellers' associations. We show which buyer-seller links will form and find the set of links that are stable and show how these links influence prices. We also show that a trade network mismatch may occur where a high-quality good remains unsold even without an economy-wide excess supply of goods.

Suggested Citation

  • Ping Wang & Alison Watts, 2006. "Formation of buyer-seller trade networks in a quality-differentiated product market," Canadian Journal of Economics, Canadian Economics Association, vol. 39(3), pages 971-1004, August.
    • Handle: RePEc:cje:issued:v:39:y:2006:i:3:p:971-1004
    as

    Download full text from publisher

    File URL: http://economics.ca/cgi/xms?jab=v39n3/CJEv39n3p0971.pdf
    File Function: Full text
    Download Restriction: Available to subscribers only. Alternative access through JSTOR and Ingenta.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vignes, Annick & Etienne, Jean-Michel, 2011. "Price formation on the Marseille fish market: Evidence from a network analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 80(1), pages 50-67.
    2. Jean-François Caulier & Ana Mauleon & Vincent Vannetelbosch, 2013. "Contractually stable networks," International Journal of Game Theory, Springer;Game Theory Society, vol. 42(2), pages 483-499, May.
    3. Messan Agbaglah, 2017. "Overlapping coalitions, bargaining and networks," Theory and Decision, Springer, vol. 82(3), pages 435-459, March.
    4. BEDAOY, Mikel & MAULEON, Ana & VANNETELBOSCH, Vincent, "undated". "Bargaining in endogenous trading networks," CORE Discussion Papers RP 2738, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Hemant Patil, 2011. "Buyer–seller networks with demand shocks and intermediation," Review of Economic Design, Springer;Society for Economic Design, vol. 15(2), pages 121-145, June.
    6. Mauleon, Ana & Sempere-Monerris, Jose J. & Vannetelbosch, Vincent J., 2011. "Networks of manufacturers and retailers," Journal of Economic Behavior & Organization, Elsevier, vol. 77(3), pages 351-367, March.
    7. Bloch, Francis & Genicot, Garance & Ray, Debraj, 2008. "Informal insurance in social networks," Journal of Economic Theory, Elsevier, vol. 143(1), pages 36-58, November.
    8. Dutta, Bhaskar & Ghosal, Sayantan & Ray, Debraj, 2005. "Farsighted network formation," Journal of Economic Theory, Elsevier, vol. 122(2), pages 143-164, June.
    9. Jean-François Caulier & Ana Mauleon & Jose Sempere-Monerris & Vincent Vannetelbosch, 2013. "Stable and efficient coalitional networks," Review of Economic Design, Springer;Society for Economic Design, vol. 17(4), pages 249-271, December.
    10. Matthew O. Jackson, 2003. "A survey of models of network formation: Stability and efficiency," Working Papers 1161, California Institute of Technology, Division of the Humanities and Social Sciences.
    11. Bedayo, Mikel & Mauleon, Ana & Vannetelbosch, Vincent, 2016. "Bargaining in endogenous trading networks," Mathematical Social Sciences, Elsevier, vol. 80(C), pages 70-82.
    12. Zakaria Babutsidze, 2012. "Consumer Learning through Interaction: Effects on Aggregate Outcomes," Chapters,in: Evolution, Organization and Economic Behavior, chapter 4 Edward Elgar Publishing.
    13. CAULIER, Jean-François & MAULEON, Ana & SEMPERE MONNERIS, Jose J. & VANNETELBOSCH, Vincent, 2013. "Stable and efficient coalitional networks," CORE Discussion Papers RP 2539, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    14. Alison Watts, 2016. "Auctions Versus Private Negotiations in Buyer-Seller Networks," Games, MDPI, Open Access Journal, vol. 7(3), pages 1-14, August.
    15. OKUBO Toshihiro & ONO Yukako & SAITO Yukiko, 2014. "Roles of Wholesalers in Transaction Networks," Discussion papers 14059, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cje:issued:v:39:y:2006:i:3:p:971-1004. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Prof. Werner Antweiler). General contact details of provider: http://edirc.repec.org/data/ceaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.