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Smart Contracting in Network Markets

Author

Listed:
  • Darrell Duffie
  • Chaojun Wang

Abstract

With complete-information bilateral bargaining in network settings, holdup is eliminated when contracts across the network are agreed atomically (all or none) via a smart contract. Applications include over-the-counter asset trading, third-party-financed purchase agreements, and land assembly. Under a novel extensive-form bargaining protocol, a firm can give a “greenlight” to the terms of a contract proposed to that firm, and the protocol automatically converts those terms into a binding contract if the terms proposed to all other firms are likewise given greenlights. In any Perfect Bayesian Equilibrium with Markov strategies, firms immediately agree on socially efficient contracts.

Suggested Citation

  • Darrell Duffie & Chaojun Wang, 2026. "Smart Contracting in Network Markets," NBER Working Papers 35678, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35678
    Note: AP CF
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    More about this item

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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