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original papers : Competition for goods in buyer-seller networks


  • Deborah F. Minehart
  • Rachel E. Kranton


This paper studies competition in a network and how a network structure determines agents' individual payoffs. It constructs a general model of competition that can serve as a reduced form for specific models. The paper shows how agents' outside options, and hence their shares of surplus, derive from "opportunity paths" connecting them to direct and indirect alternative exchanges. Analyzing these paths, results show how third parties' links affect different agents' bargaining power. Even distant links may have large effects on agents' earnings. These payoff results, and the identification of the paths themselves, should prove useful to further analysis of network structure.

Suggested Citation

  • Deborah F. Minehart & Rachel E. Kranton, 2000. "original papers : Competition for goods in buyer-seller networks," Review of Economic Design, Springer;Society for Economic Design, vol. 5(3), pages 301-331.
  • Handle: RePEc:spr:reecde:v:5:y:2000:i:3:p:301-331

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    References listed on IDEAS

    1. Thomas Kittsteiner & Jörg Nikutta & Eyal Winter, 2004. "Declining valuations in sequential auctions," International Journal of Game Theory, Springer;Game Theory Society, vol. 33(1), pages 89-106, January.
    2. Crawford, Vincent P & Knoer, Elsie Marie, 1981. "Job Matching with Heterogeneous Firms and Workers," Econometrica, Econometric Society, vol. 49(2), pages 437-450, March.
    3. Demange, Gabrielle & Gale, David, 1985. "The Strategy Structure of Two-sided Matching Markets," Econometrica, Econometric Society, vol. 53(4), pages 873-888, July.
    4. Demange, Gabrielle & Gale, David & Sotomayor, Marilda, 1986. "Multi-Item Auctions," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 863-872, August.
    5. 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.
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    Cited by:

    1. Carayol, Nicolas & Roux, Pascale, 2009. "Knowledge flows and the geography of networks: A strategic model of small world formation," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 414-427, August.
    2. Takács, Károly, 2010. "Hálózati kísérletek
      [Network experiments]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 958-979.
    3. Jackson, Matthew O. & Rogers, Brian & Zenou, Yves, 2016. "Networks: An economic perspective," CEPR Discussion Papers 11452, C.E.P.R. Discussion Papers.
    4. Arnold Polanski, 2016. "Matching structure and bargaining outcomes in buyer–seller networks," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 46(4), pages 767-776, April.
    5. Rodrigo Harrison & Roberto Munoz, 2003. "Global Games with Strategic Substitutes," Working Papers gueconwpa~03-03-07, Georgetown University, Department of Economics.

    More about this item


    Bipartite graphs; outside options; link externalities;

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General


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