Trading networks with price-setting agents
In a wide range of markets, individual buyers and sellers trade through intermediaries, who determine prices via strategic considerations. Typically, not all buyers and sellers have access to the same intermediaries, and they trade at correspondingly different prices that reflect their relative amounts of power in the market. We model this phenomenon using a game in which buyers, sellers, and traders engage in trade on a graph that represents the access each buyer and seller has to the traders. We show that the resulting game always has a subgame perfect Nash equilibrium, and that all equilibria lead to an efficient allocation of goods. Finally, we analyze trader profits in terms of the graph structure -- roughly, a trader can command a positive profit if and only if it has an "essential" connection in the network, thus providing a graph-theoretic basis for quantifying the amount of competition among traders.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Babaioff, Moshe & Nisan, Noam & Pavlov, Elan, 2009. "Mechanisms for a spatially distributed market," Games and Economic Behavior, Elsevier, vol. 66(2), pages 660-684, July.
- Leonard, Herman B, 1983. "Elicitation of Honest Preferences for the Assignment of Individuals to Positions," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 461-479, June.
- Crawford, Vincent P & Knoer, Elsie Marie, 1981. "Job Matching with Heterogeneous Firms and Workers," Econometrica, Econometric Society, vol. 49(2), pages 437-450, March.
- Douglas M. Gale & Shachar Kariv, 2007. "Financial Networks," American Economic Review, American Economic Association, vol. 97(2), pages 99-103, May.
- Bikhchandani, Sushil & Ostroy, Joseph M., 2002. "The Package Assignment Model," Journal of Economic Theory, Elsevier, vol. 107(2), pages 377-406, December.
- Hall, George & Rust, John, 2000.
"An empirical model of inventory investment by durable commodity intermediaries,"
Carnegie-Rochester Conference Series on Public Policy,
Elsevier, vol. 52(1), pages 171-214, June.
- George Hall & John Rust, 1999. "An Empirical Model of Inventory Investment by Durable Commodity Intermediaries," Macroeconomics 9904005, EconWPA.
- George J. Hall & John Rust, 1999. "An Empirical Model of Inventory Investment by Durable Commodity Intermediaries," Cowles Foundation Discussion Papers 1228, Cowles Foundation for Research in Economics, Yale University.
- Roger B. Myerson & Mark A. Satterthwaite, 1981.
"Efficient Mechanisms for Bilateral Trading,"
469S, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Christian Hellwig, 2000.
"Money, Intermediaries and Cash-in-Advance Constraints,"
Econometric Society World Congress 2000 Contributed Papers
1631, Econometric Society.
- Christian Hellwig, 2000. "Money, Intermediaries and Cash-in-Advance Constraints," FMG Discussion Papers dp349, Financial Markets Group.
- Gabrielle Demange & Gale David & Marilda Sotomayor, 1986.
- Yavas, Abdullah, 1994. "Middlemen in Bilateral Search Markets," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 406-429, July.
- Leon Yang Chu & Zuo-Jun Max Shen, 2006. "Agent Competition Double-Auction Mechanism," Management Science, INFORMS, vol. 52(8), pages 1215-1222, August.
- Kelso, Alexander S, Jr & Crawford, Vincent P, 1982. "Job Matching, Coalition Formation, and Gross Substitutes," Econometrica, Econometric Society, vol. 50(6), pages 1483-1504, November.
- Li, Yiting, 1998. "Middlemen and private information," Journal of Monetary Economics, Elsevier, vol. 42(1), pages 131-159, June.
- repec:oxf:wpaper:gprg-wps-068 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:eee:gamebe:v:67:y:2009:i:1:p:36-50. 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: (Dana Niculescu)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.