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Brokerage rents and intermediation networks

Author

Listed:
  • Syngjoo Choi

    (SNU - Seoul National University [Seoul])

  • Sanjeev Goyal

    (CAM - University of Cambridge [Cambridge, UK], NYU - New York University [New York] - NYU - NYU System)

  • Frederic Moisan

    (EM - EMLyon Business School)

Abstract

"This paper provides experimental evidence on the economic determinants of intermediation networks by considering two pricing rules—respectively, criticality and betweenness—and three group sizes of subjects—10, 50, and 100 subjects. We find that when brokerage benefits accrue only to traders who lie on all paths of intermediation, stable networks involve interconnected cycles, and trading path lengths grow while linking and payoff inequality remain modest as the number of traders grows. By contrast, when brokerage benefits are equally distributed among traders on the shortest paths, stable networks contain a few hubs that provide the vast majority of links, and trading path lengths remain unchanged while linking and payoff inequality explode as the number of traders grows."

Suggested Citation

  • Syngjoo Choi & Sanjeev Goyal & Frederic Moisan, 2023. "Brokerage rents and intermediation networks," Post-Print hal-04325708, HAL.
    • Handle: RePEc:hal:journl:hal-04325708
    DOI: 10.1073/pnas.2301929120
    Note: View the original document on HAL open archive server: https://hal.science/hal-04325708v1
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    Cited by:

    1. Hanaki, Nobuyuki & Kayaba, Yutaka & Maekawa, Jun & Matsushima, Hitoshi, 2024. "Two experiments on trading information goods in a network," Games and Economic Behavior, Elsevier, vol. 145(C), pages 1-18.

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    Keywords

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    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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