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SUMMARY:Intermediated Exchange: Theory and Experiments - Sanjeev Goyal (Un
 iversity of Cambridge)
DTSTART:20130129T150000Z
DTEND:20130129T160000Z
UID:TALK40947@talks.cam.ac.uk
CONTACT:Felix Fischer
DESCRIPTION:Intermediation is a prominent feature of the modern economy. T
 wo features of intermediated exchange are salient. One\, there are multipl
 e intermediaries between the `source' and the `destination'. So different 
 intermediaries need to coordinate their actions to ensure that exchange do
 es take place. The second feature is market power: some intermediaries may
  lie on many paths between buyer and seller. We develop a network model wi
 th many traders: some of these traders can undertake exchange directly wit
 h each other\, while others can only undertake exchange via other traders.
  We allow for all possible networks\, subject to the caveat that there exi
 sts at least one path between every pair of traders. Traders set prices an
 d trade occurs through minimum cost routes.\n\nWe show that coordination a
 mong intermediaries is key to the efficiency of exchange. Strategic intera
 ction delivers extremal outcomes for intermediation costs: either buyer an
 d seller or the intermediaries extract all surplus. Finally\, we show that
  intermediaries with market power extract the entire surplus of trade.\n\n
 This is joint work with Syngjoo Choi and Andrea Galeotti.
LOCATION:MR12\, Centre for Mathematical Sciences\, Wilberforce Road\, Camb
 ridge
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