original papers: Competition for goods in buyer-seller networks

Deborah F. Minehart and Rachel Kranton

Review of Economic Design, 2000, vol. 5, issue 3, 331 pages

Abstract: This paper studies competition in a network and how a network structure determines agents' individual payoffs. It constructs a general model of competition that can serve as a reduced form for specific models. The paper shows how agents' outside options, and hence their shares of surplus, derive from "opportunity paths" connecting them to direct and indirect alternative exchanges. Analyzing these paths, results show how third parties' links affect different agents' bargaining power. Even distant links may have large effects on agents' earnings. These payoff results, and the identification of the paths themselves, should prove useful to further analysis of network structure.

Keywords: Bipartite graphs; outside options; link externalities (search for similar items in EconPapers)
JEL-codes: D00 D40 (search for similar items in EconPapers)
Date: 2000-09-11
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Citations: View citations in EconPapers (6)

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