Volume of Trade and Dynamic Network Formation in Two-Sided Economies
We study the long-run stability of trade networks in a two-sided economy of agents labelled men and women. Each agent desires relationships with the other type, but having multiple partners is costly. This cost-bene?t trade-o¤ results in each agent having a single-peaked utility over the number of partners?the volume of trade?, the peak being greater for men than for women. We propose a stochastic matching process in which self-interested agents form and sever links over time. Links can be added or deleted, sometimes simultaneously by a single agent. While the unperturbed process yields each pairwise stable network as an absorbing state, stochastic stability in two perturbed processes provides a signi?cant re?nement, leading respectively to egalitarian and anti-egalitarian pairwise stable networks. This has implications for the concentration on each side of the market of a random information shock. The analysis captures stylized facts, related to market fragmentation, concentration and contagion asymmetry, in several two-sided economies.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
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.:
- Alvin E. Roth, 2006.
"Repugnance as a Constraint on Markets,"
321307000000000629, UCLA Department of Economics.
- Roland Pongou & Roberto Serrano, 2013.
"Fidelity Networks and Long-Run Trends in HIV/AIDS Gender Gaps,"
American Economic Review,
American Economic Association, vol. 103(3), pages 298-302, May.
- Pongou, Roland & Serrano, Roberto, 2013. "Fidelity Networks and Long-Run Trends in HIV/AIDS Gender Gaps," MPRA Paper 47232, University Library of Munich, Germany, revised 30 Sep 2014.
- Dutta, B. & van den Nouweland, C.G.A.M. & Tijs, S.H., 2003.
"Link formation in cooperative situations,"
Other publications TiSEM
840ac1d0-9e23-41a7-832e-8, Tilburg University, School of Economics and Management.
- Dutta, B. & van den Nouweland, C.G.A.M. & Tijs, S.H., 1995. "Link formation in cooperative situations," Discussion Paper 1995-35, Tilburg University, Center for Economic Research.
- Dutta, B. & van den Nouweland, C.G.A.M. & Tijs, S.H., 1998. "Link formation in cooperative situations," Other publications TiSEM fb302bdf-f6ab-4909-99d5-5, Tilburg University, School of Economics and Management.
- Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993.
"Learning, Mutation, and Long Run Equilibria in Games,"
Econometric Society, vol. 61(1), pages 29-56, January.
- Kandori, M. & Mailath, G.J., 1991. "Learning, Mutation, And Long Run Equilibria In Games," Papers 71, Princeton, Woodrow Wilson School - John M. Olin Program.
- M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
- repec:dgr:kubcen:199535 is not listed on IDEAS
- Roberto Serrano & Roland Pongou, 2009.
"A Dynamic Theory Of Fidelity Networks With An Application To The Spread Of Hiv/Aids,"
- Roland Pongou & Roberto Serrano, 2009. "A dynamic theory of fidelity networks with an application to the spread of HIV/AIDS," Working Papers 2009-03, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
- Roland Pongou & Roberto Serrano, 2009. "A Dynamic Theory of Fidelity Networks with an Application to the Spread of HIV/AIDS," Working Papers 2009-2, Brown University, Department of Economics.
- Feri, Francesco, 2007. "Stochastic stability in networks with decay," Journal of Economic Theory, Elsevier, vol. 135(1), pages 442-457, July.
- Mathias Staudigl, 2010.
"Potential games in volatile environments,"
Vienna Economics Papers
1002, University of Vienna, Department of Economics.
- Slikker, Marco & van den Nouweland, Anne, 2001.
"A One-Stage Model of Link Formation and Payoff Division,"
Games and Economic Behavior,
Elsevier, vol. 34(1), pages 153-175, January.
- Slikker, M. & van den Nouweland, C.G.A.M., 1997. "A One-Stage Model of Link Formation and Payoff Division," Discussion Paper 1997-23, Tilburg University, Center for Economic Research.
- Roth, Alvin E & Vande Vate, John H, 1990. "Random Paths to Stability in Two-Sided Matching," Econometrica, Econometric Society, vol. 58(6), pages 1475-80, November.
When requesting a correction, please mention this item's handle: RePEc:bro:econwp:2013-6. 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: (Brown Economics Webmaster)
If references are entirely missing, you can add them using this form.