TY - JOUR
T1 - Decentralised bilateral trading, competition for bargaining partners and the “law of one price”
AU - Chatterjee, Kalyan
AU - Das, Kaustav
N1 - Funding Information:
We thank the Human Capital Foundation ( www.hcfoundation.ru ), and especially Andrey P. Vavilov, for support to The Pennsylvania State University’s Department of Economics. Dr. Chatterjee would also like to thank the Institute for Advanced Study, Princeton, and the Richard B. Fisher endowment for financial support of his membership of the Institute during the year 2014–2015. We thank Bhaskar Dutta, Drew Fudenberg, Faruk Gul, Ed Green, Vijay Krishna, Selçuk Özyurt, Larry Samuelson, Adam Slawski and Asher Wolinsky for their insightful comments and suggestions. A part of the revision was made when Das was visiting Cambridge-INET, Department of Economics. Das thanks Sanjeev Goyal and Hamid Sabourian for hosting him at INET. We also sincerely thank the Associate Editor and the anonumous referees whose helpful comments have made the exposition of this paper much better.
Publisher Copyright:
© 2015, Springer-Verlag Berlin Heidelberg.
PY - 2015/11/1
Y1 - 2015/11/1
N2 - 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.
AB - 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.
UR - https://www.scopus.com/pages/publications/84947248900
UR - https://www.scopus.com/pages/publications/84947248900#tab=citedBy
U2 - 10.1007/s00182-014-0461-7
DO - 10.1007/s00182-014-0461-7
M3 - Article
AN - SCOPUS:84947248900
SN - 0020-7276
VL - 44
SP - 949
EP - 991
JO - International Journal of Game Theory
JF - International Journal of Game Theory
IS - 4
ER -