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Self-Organization of Trade Networks in an Economy with Imperfect Infrastructure


  • Sergei Guriev
  • Igor Pospelov
  • Margarita Shakhova

    () (Computing Center, Russian Academy of Science)


A multi-agent model is proposed for the analysis of self- organization of trade networks. The model takes into account time spent on transactions (`` trade distance). It is shown that the same set of traders may generate trade networks of different structures depending on average trade distance. When the latter is small, the market is near-competitive, trade structures are flat. When trade distance is large, the set of traders exhibit monopolistic behavior, traders sell only to rich consumers, trades are rather large. Under medium trade distance a phase transition and complex dynamics are observed, including significant price oscillations, regular bursts of shortages and long chains of traders. Emergence of trader market strategies such as stabilizing wholesale traders and destabilizing speculators is discovered. The model is studied both analytically and via computer simulations.

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  • Sergei Guriev & Igor Pospelov & Margarita Shakhova, "undated". "Self-Organization of Trade Networks in an Economy with Imperfect Infrastructure," Computing in Economics and Finance 1996 _022, Society for Computational Economics.
  • Handle: RePEc:sce:scecf6:_022

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    References listed on IDEAS

    1. Rubinstein, Ariel & Wolinsky, Asher, 1985. "Equilibrium in a Market with Sequential Bargaining," Econometrica, Econometric Society, vol. 53(5), pages 1133-1150, September.
    2. Evstigneev, I. V. & Taksar, M., 1995. "Stochastic equilibria on graphs, II," Journal of Mathematical Economics, Elsevier, vol. 24(4), pages 383-406.
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    Cited by:

    1. Leigh S. Tesfatsion, "undated". "An Evolutionary Trade Network Game with Preferential Partner Selection," Computing in Economics and Finance 1996 _057, Society for Computational Economics.
    2. Leigh TESFATSION, 1995. "How Economists Can Get Alife," Economic Report 37, Iowa State University Department of Economics.
    3. Tesfatsion, Leigh S., 1998. "Gale-Shapley Matching in an Evolutionary Trade Network Game," Staff General Research Papers Archive 1230, Iowa State University, Department of Economics.

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