Intermediary networks under the rule of equi-repartition of profits
Languages of publication
This paper studies the stability, equilibrium and efficiency of directed networks of trade intermediaries under a rule of equi-repartition of profits. This equi-repartition rule, although simple and natural, introduces complex topologic considerations from players. Core-periphery structures can arise endogenously and result in stable networks even assuming complete homogeneity of all agents in the network. The concept of network partition is introduced to provide examples of networks that could be seen as arising from the linking up of a set of disjoint networks in an endogenous manner. From an aggregate welfare perspective as well as sometimes from an individual perspective, leaving the linking up of those individually efficient networks to each individual agent can result in an inefficient aggregate network, even if taken in isolation each pre-existing network is efficient.
- Bala V., Goyal S. (2000) A noncooperative model of network formation. Econometrica 68, no 5, pp. 1181–1229.
- Babus, A., (2013) Endogenous Intermediation in over-the-counter markets. Imperial College London working paper.
- Bellefl amme P., Bloch F. (2004) Market sharing agreements and collusive networks. International Economic Review 45 No 2, pp. 387–411.
- Buskens, V., van de Rijt, A. (2008) Strategic network formation with structural holes. American Journal of Sociology 114, pp. 37–407.
- Calvo-Armengol A., Jackson M.O. (2004) The effect of social networks on employment and inequality. American Economic Review 94, pp. 426–454.
- Craig, B., von Peter, G. (2014) Interbank tiering and money center banks. Journal of Financial Intermediation (Forthcoming)
- Veld D., van der Leij M., Hommes C. (2014) The formation of a core periphery structure in heterogeneous fi nancial networks, Tinbergen Institute Discussion Paper TI 2014-098/II.
- Dutta B., Ghosal S., Ray D. (2004) Farsighted network formation. Journal of Economic Theory 122, pp. 143–164.
- Fricke, D., Lux, T. (2014) Core-periphery structure in the overnight money market: Evidence from the e-MID trading platform. Computational Economis (Forthcoming).
- Gimbert J. (1999) On digraphs with unique walks of closed lengths between vertices. The Australasian Journal of Combinatorics 20, pp. 77–90.
- Goyal S., Joshi S. (2003) Networks of collaboration in oligopoly. Games and Economic Behavior 43, pp. 57–85.
- Goyal S., Vega-Redondo F. (2003) Network formation and social coordination. Working Papers 481, Queen Mary, University of London, School of Economics and Finance.
- Jackson M.O. (1996) A strategic model of social and economic networks. Journal of Economic Theory 71, pp. 44–74.
- Jackson M.O. (2002) The evolution of social and economic networks. Journal of Economic Theory 106, pp. 265–295.
- Jackson M.O., Wolinsky A. (1996) A strategic model of economic and social networks. Journal of Economic Theory 71, pp. (1) 44–74.
- Jackson M.O., Watts A. (2001) The existence of pair-wise stable networks. Seoul Journal of Economics 14, pp. 299–321.
- Kleinberg, J., Suri, S., Tardos, E., Wexler, T. (2008) Strategic network formation with structural holes. Proceedings 9th ACM Conference on Electronic Commerce, pp. 480–489.
- Matutes C., Padilla A.J. (1994) Shared ATM networks and banking competition. European Economic Review 38, pp. 1113–1138.
- McAndrews J. J., Rob R. (1996) Shared ownership and pricing in a network switch. International Journal of Industrial Organization 14, pp. 727–745.
- Siedlarek J. (2011) Intermediation in Networks, Nota di Lavoro. FEEM Working Paper 42.
- Spence M. (1984) Cost reduction, competition, and industry performance. Econometrica 52 No 1, pp. 101–122.
- Vickers J. (1995) Competition and regulation in vertically related markets. Review of Economic Studies 62, pp. 1–17.
- Valletti T.M., Cambini C. (2005) Investments and network competition. The RAND Journal of Economics 36 No 2, pp. 446–467.
- Volgelsang I. (2003) Price regulation of access to telecommunications networks. Journal of Economic Literature 4, pp. 830–862.
Publication order reference