Trading in networks : theory and experiments
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1542-4766; 1542-4774
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Journal of the European economic association, 2017, Vol. 15, No. 4, pp. 784-817
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CHOI, Syngjoo, GALEOTTI, Andrea, GOYAL, Sanjeev, Trading in networks : theory and experiments, Journal of the European economic association, 2017, Vol. 15, No. 4, pp. 784-817 - https://hdl.handle.net/1814/59585
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.
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Published: 14 February 2017