Dealer Networks: (In)Efficiency

Seminars - Theory and Experiments Seminar Series
12:45 - 14:00
Seminar Room 5.e4.sr04 - Via Roentgen 1

Abstract: A single object is traded in a network of dealers, who have private information about their private value for it. The number of connections that each dealer has is random and determined, once they purchase the object, by a common degree distribution. Sellers post mechanisms to potential buyers in their neighborhood. We show that, despite asymmetric information and limited trading opportunities, ex-post efficiency generally attains in the limit as trading becomes more and more frequent, except where the network is a chain of monopolists (i.e. each seller has always precisely one single buyer).

Daniele Condorelli (University of Warwick)

Abstract

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