Autore: Vriend, Nick
Titolo: Market-making and decentralized trade
Periodico: European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papers
Anno: 1991 - Fascicolo: 49 - Pagina iniziale: 1 - Pagina finale: 58

A model of a decentralized economy is presented. The basic features of decentralized trade taken into account are, that agents have a limited knowledge of their economic environment, that such knowledge requires some kind of communication or interaction between agents, and that agents face uncertainty as to their immediate trading opportunities. The paper stresses the importance of an explicit consideration of the communication and trading structure in models of decentralized trade. We consider trade in a homogeneous commodity. Besides deciding upon their effective demands, agents may create their own markets by spreading information about themselves. The market structure in a Symmetric Nash Equilibrium is characterized as follows. The economy splits up in a number of possibly overlapping, imperfectly competitive markets. These markets are all made by sellers, as buyers won’t engage in such activity. Both suppliers and demanders may be rationed at the same time, i.e. markets are not orderly.


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Testo completo: http://hdl.handle.net/1814/388

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