Brokerage rents and intermediation networks

Syngjoo Choi, Sanjeev Goyal and Frederic Moisan ()
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Sanjeev Goyal: CAM - University of Cambridge [UK], NYU - New York University [New York] - NYU - NYU System
Frederic Moisan: EM - EMLyon Business School

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Abstract: "This paper provides experimental evidence on the economic determinants of intermediation networks by considering two pricing rules—respectively, criticality and betweenness—and three group sizes of subjects—10, 50, and 100 subjects. We find that when brokerage benefits accrue only to traders who lie on all paths of intermediation, stable networks involve interconnected cycles, and trading path lengths grow while linking and payoff inequality remain modest as the number of traders grows. By contrast, when brokerage benefits are equally distributed among traders on the shortest paths, stable networks contain a few hubs that provide the vast majority of links, and trading path lengths remain unchanged while linking and payoff inequality explode as the number of traders grows."

Keywords: intermediation networks; brokerage rents; large-scale laboratory experiment (search for similar items in EconPapers)
Date: 2023-07-03
New Economics Papers: this item is included in nep-exp and nep-net
Note: View the original document on HAL open archive server: https://hal.science/hal-04325708v1
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Published in Proceedings of the National Academy of Sciences of the United States of America, 2023, 120 (28), ⟨10.1073/pnas.2301929120⟩

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Related works:
Working Paper: Brokerage Rents and Intermediation Networks (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04325708

DOI: 10.1073/pnas.2301929120

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