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Decentralized Trading Networks: Equilibria and Fairness

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  • Simon Finster
  • Paul W. Goldberg
  • Edwin Lock
  • Matilde Tullii

Abstract

We explore stability and fairness considerations in decentralized networked markets with bilateral contracts, building on the trading networks framework [Hatfield et al., 2013]. In our trading network game, we show that a well-defined subset of Nash equilibria can be supported as competitive equilibria. Considering an offer-based trading dynamic as well as a stochastic price clock market, we prove new convergence results to Nash equilibrium and competitive equilibrium, providing a rationale for stability properties in decentralized, dynamic trading networks. Turning to the tension between fairness and (core) stability, we prove several negative results: inessential agents always receive zero utility in any core outcome, and even essential agents can get zero utility in all core outcomes.

Suggested Citation

  • Simon Finster & Paul W. Goldberg & Edwin Lock & Matilde Tullii, 2026. "Decentralized Trading Networks: Equilibria and Fairness," Papers 2602.20868, arXiv.org.
    • Handle: RePEc:arx:papers:2602.20868
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    References listed on IDEAS

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    1. John William Hatfield & Scott Duke Kominers & Alexandru Nichifor & Michael Ostrovsky & Alexander Westkamp, 2013. "Stability and Competitive Equilibrium in Trading Networks," Journal of Political Economy, University of Chicago Press, vol. 121(5), pages 966-1005.
    2. Ravi Jagadeesan & Scott Duke Kominers & Ross Rheingans-Yoo, 2020. "Lone wolves in competitive equilibria," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 55(2), pages 215-228, August.
    3. Mohammad Akbarpour & Piotr Dworczak & Scott Duke Kominers, 2024. "Redistributive Allocation Mechanisms," Journal of Political Economy, University of Chicago Press, vol. 132(6), pages 1831-1875.
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    6. Vijay V. Vazirani, 2024. "Fair Core Imputations for the Assignment Game: New Solution Concepts and Efficient Algorithms," Papers 2402.11437, arXiv.org, revised Nov 2025.
    7. Michael Ostrovsky, 2008. "Stability in Supply Chain Networks," American Economic Review, American Economic Association, vol. 98(3), pages 897-923, June.
    8. Elizabeth Baldwin & Paul Klemperer & Edwin Lock, 2024. "Implementing Walrasian Equilibrium: The Languages of Product-Mix Auctions," Economics Series Working Papers 1060, University of Oxford, Department of Economics.
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    12. Vijay V. Vazirani, 2022. "New Characterizations of Core Imputations of Matching and $b$-Matching Games," Papers 2202.00619, arXiv.org, revised Dec 2022.
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