Decentralised bilateral trading, competition for bargaining partners and the "law of one price"
Chatterjee, Kalyan; Das, Kaustav
Date: 10 January 2015
Journal
International Journal of Game Theory
Publisher
Springer Verlag
Publisher DOI
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Abstract
This paper analyses a model of price formation in a market with a finite
number of non-identical agents engaging in decentralised bilateral interactions. We
focus mainly on equal numbers of buyers and sellers, though we discuss other cases.
All characteristics of agents are assumed to be common knowledge. Buyers simultaneously
make ...
This paper analyses a model of price formation in a market with a finite
number of non-identical agents engaging in decentralised bilateral interactions. We
focus mainly on equal numbers of buyers and sellers, though we discuss other cases.
All characteristics of agents are assumed to be common knowledge. Buyers simultaneously
make targeted offers, which sellers can accept or reject. Acceptance leads to a
pair exiting and rejection leads to the next period. Offers can be public, private or “ex
ante public”. As the discount factor goes to 1, the price in all transactions converges
to the same value.
Economics
Faculty of Environment, Science and Economy
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