Trading Networks With Frictions-Reference-Cited by-同舟云学术

Trading Networks With Frictions

Published:2019 Issue:5 Volume:87 Page:1633-1661
ISSN:0012-9682
Container-title:Econometrica
language:en
Short-container-title:ECTA

Author:

Fleiner Tamás¹²,Jagadeesan Ravi³⁴,Jankó Zsuzsanna⁵⁶,Teytelboym Alexander⁷

Affiliation:

1. Department of Computer Science and Information Theory, Budapest University of Technology and Economics

2. Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences

3. Harvard Business School

4. Department of Economics, Harvard University

5. Department of Mathematics, University of Hamburg

6. Department of Operations Research and Actuarial Sciences, Corvinus University of Budapest

7. Department of Economics, Institute for New Economic Thinking at the Oxford Martin School, St. Catherine's College, University of Oxford

Abstract

We show how frictions and continuous transfers jointly affect equilibria in a model of matching in trading networks. Our model incorporates distortionary frictions such as transaction taxes and commissions. When contracts are fully substitutable for firms, competitive equilibria exist and coincide with outcomes that satisfy a cooperative solution concept called trail stability. However, competitive equilibria are generally neither stable nor Pareto‐efficient.

Funder

Hungarian Scientific Research Fund

Economic and Social Research Council

Nemzeti Kutatási, Fejlesztési és Innovaciós Alap

Publisher

The Econometric Society

Subject

Economics and Econometrics

Link

https://onlinelibrary.wiley.com/doi/pdf/10.3982/ecta14159

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