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Network structures of a centralized and a decentralized market. A direct comparison

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  • Sylvain Mignot

  • Annick Vignes

    (CAMS - Centre d'Analyse et de Mathématique sociales - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique)

Abstract

A fundamental assumption in economics is that rational individuals act in their own self interest. One implication is that, when trading, buyers are supposed to seek for the lowest price and sellers for the highest one and social interactions are not considered. It is now largely accepted that social relationships affect the efficiency of a market structure (centralized or decentralized) . The objectives of the current study is to examine the network structures of a very specific market : the Boulogne-sur-mer fish market. On this market two market design (auctions and bilateral exchanges) coexist, each beeing used by the same buyers and sellers, exchanging similar goods. For each sub-market we examine (1) the global network structure, (2) the local network structure, and (3) we identify the traders characteristics that best explain the network structures. The objective is to identify the the influence of trust nad the influence of reputation in the individual choices of trading partners. Structural measures are used to characterize networks structures. Exponential random graph models are used to evaluate how trader characteristics explain purchasing patterns, and how the influence of these characteristics vary with the market mechanism. We bring into the light that, when the transaction links on the auction market reflects the economic constraints of the partners, the relationships on the bilateral market depends on something more. Clearly, the prices of the bilateral transactions are the consequences of economics and non economics determinants. At first glance, the stable co-existence of two market structures looks like a paradox. Our results help to understand the distinctive characteristics and functioning of each sub-market. This discussion contributes to the debate about the efficiency of market structures.

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  • Sylvain Mignot & Annick Vignes, 2022. "Network structures of a centralized and a decentralized market. A direct comparison," Post-Print hal-03801324, HAL.
    • Handle: RePEc:hal:journl:hal-03801324
    Note: View the original document on HAL open archive server: https://hal.science/hal-03801324
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    References listed on IDEAS

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    1. Sylvain Mignot & Gabriele Tedeschi & Annick Vignes, 2012. "An Agent Based Model of Switching: The Case of Boulogne S/mer Fish Market," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 15(2), pages 1-3.
    2. Ana Babus & Péter Kondor, 2018. "Trading and Information Diffusion in Over‐the‐Counter Markets," Econometrica, Econometric Society, vol. 86(5), pages 1727-1769, September.
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