Working Paper: CEPR ID: DP16800
Authors: Daniele Condorelli; Andrea Galeotti; Ludovic Renou
Abstract: Many goods are allocated via resale networks, reaching their final buyer through a sequence of exchanges. We study a model where a single good is traded by a potentially infinite number of traders who have private valuations for the good and are connected in a random network that determines resale possibilities. Whoever holds the good has bargaining power. We show that large resale networks allocate efficiently in the no-discounting limit, even if resale opportunities are locally-limited. When the network is a stationary random tree, the limiting equilibrium is inefficient if and only if the network is a chain of monopolists.
Keywords: No keywords provided
JEL Codes: C73; C78; D44; D82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| structure of the resale network (L14) | efficiency of allocation (D61) |
| chain of monopolists (L12) | inefficiency of limiting equilibrium (D59) |
| competition among buyers (D41) | efficiency of allocation (D61) |
| large resale networks (L81) | efficient allocation (D61) |