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Trading networks with frictions

Abstract:
We show how frictions and continuous transfers jointly affect equilibria in a model of matching in trading networks. Our model incorporates distortionary frictions such as transaction taxes and commissions. When contracts are fully substitutable for firms, competitive equilibria exist and coincide with outcomes that satisfy a cooperative solution concept called trail stability. However, competitive equilibria are generally neither stable nor Pareto-efficient.
Publication status:
Published
Peer review status:
Peer reviewed

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Publisher copy:
10.3982/ECTA14159

Authors


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Institution:
University of Oxford
Division:
SSD
Department:
SOGE
Sub department:
Smith School
Oxford college:
St Catherine's College
Role:
Author
Publisher:
Economic Society Publisher's website
Journal:
Econometrica Journal website
Volume:
87
Issue:
5
Pages:
1633-1661
Publication date:
2019-09-20
Acceptance date:
2019-04-15
DOI:
EISSN:
1468-0262
ISSN:
0012-9682
Source identifiers:
1008104
Keywords:
Pubs id:
pubs:1008104
UUID:
uuid:dbfeb3c2-9377-4678-a12f-d8f539b59063
Local pid:
pubs:1008104
Deposit date:
2019-06-06

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