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Trading in Networks: Theory and Experiments

Journal

Journal of the European Economic Association

Subject

Economics

Publishing details

Journal of the European Economic Association 2017 Vol 15:4 p 784-817

Authors / Editors

Choi S;Galeotti A;Goyal S

Biographies

Andrea Galeotti

Publication Year

2017

Abstract

We propose a model of posted prices in networks. The model maps traditional concepts of market power, competition, and double marginalization into networks, allowing for the study of pricing in complex structures of intermediation, such as supply chains, transportation and communication networks, and financial brokerage. We provide a complete characterization of equilibrium prices. Our experiments complement our theoretical work and point to node criticality as an organizing principle for understanding pricing, efficiency, and the division of surplus in networked markets.

Available on ECCH

No


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