Networks and Markets: The dynamic impacts of information, matching and transaction costs on global trade
The purpose of this paper is to explore strategic incentives to use trade networks rather than markets and to shed light on the dynamic relations between two distinct trading systems: a formal system of markets and a decentralised system of networks. We investigate the issues by mainly focusing on the role of matching in a trade network. The existing literature emphasises the importance of information transmission in achieving efficiency in repeated personal transactions under perfect observability. By contrast, we show that a folk theorem may hold if we change the way traders are matched, without introducing any information sharing. We also examine different stages of an evolution of trading system. The study states conditions under which agents prefer to trade on networks rather than in markets.
|Date of creation:||Nov 2009|
|Contact details of provider:|| Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD|
Phone: (44) 0115 951 5620
Fax: (0115) 951 4159
Web page: http://www.nottingham.ac.uk/economics/cedex/
More information through EDIRC
References listed on IDEAS
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.:
- Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-548, June.
- Takako Fujiwara-Greve & Masahiro Okuno-Fujiwara, 2009. "Voluntarily Separable Repeated Prisoner's Dilemma," Review of Economic Studies, Oxford University Press, vol. 76(3), pages 993-1021.
- Rosenthal, R W, 1979. "Sequences of Games with Varying Opponents," Econometrica, Econometric Society, vol. 47(6), pages 1353-1366, November.
- Jackson, Matthew O. & Watts, Alison, 2002.
"On the formation of interaction networks in social coordination games,"
Games and Economic Behavior,
Elsevier, vol. 41(2), pages 265-291, November.
- Matthew O. Jackson & Alison Watts, 2000. "On the Formation of Interaction Networks in Social Coordination Games," Econometric Society World Congress 2000 Contributed Papers 0778, Econometric Society.
- Fudenberg, Drew & Levine, David I & Maskin, Eric, 1994.
"The Folk Theorem with Imperfect Public Information,"
Econometric Society, vol. 62(5), pages 997-1039, September.
- Fudenberg, D. & Levine, D.K. & Maskin, E., 1989. "The Folk Theorem With Inperfect Public Information," Working papers 523, Massachusetts Institute of Technology (MIT), Department of Economics.
- Drew Fudenberg & David K. Levine & Eric Maskin, 1994. "The Folk Theorem with Imperfect Public Information," Levine's Working Paper Archive 394, David K. Levine.
- Drew Fudenberg & David K. Levine & Eric Maskin, 1994. "The Folk Theorem with Imperfect Public Information," Levine's Working Paper Archive 2058, David K. Levine.
- Green, Edward J., 1980. "Noncooperative price taking in large dynamic markets," Journal of Economic Theory, Elsevier, vol. 22(2), pages 155-182, April.
- Sabourian, Hamid, 1990. "Anonymous repeated games with a large number of players and random outcomes," Journal of Economic Theory, Elsevier, vol. 51(1), pages 92-110, June.
- Michihiro Kandori, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Oxford University Press, vol. 59(1), pages 63-80.
- Bowles, Samuel & Gintis, Herbert, 2004. "Persistent parochialism: trust and exclusion in ethnic networks," Journal of Economic Behavior & Organization, Elsevier, vol. 55(1), pages 1-23, September.
- Roy Radner & Roger Myerson & Eric Maskin, 1986. "An Example of a Repeated Partnership Game with Discounting and with Uniformly Inefficient Equilibria," Review of Economic Studies, Oxford University Press, vol. 53(1), pages 59-69.
When requesting a correction, please mention this item's handle: RePEc:not:notcdx:2009-22. 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: (Suzanne Robey)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.