Smart Contracting in Network Markets

Darrell Duffie and Chaojun Wang

No 35678, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: With complete-information bilateral bargaining in network settings, holdup is eliminated when contracts across the network are agreed atomically (all or none) via a smart contract. Applications include over-the-counter asset trading, third-party-financed purchase agreements, and land assembly. Under a novel extensive-form bargaining protocol, a firm can give a “greenlight” to the terms of a contract proposed to that firm, and the protocol automatically converts those terms into a binding contract if the terms proposed to all other firms are likewise given greenlights. In any Perfect Bayesian Equilibrium with Markov strategies, firms immediately agree on socially efficient contracts.

JEL-codes: C70 D47 D60 D70 (search for similar items in EconPapers)
Date: 2026-08
New Economics Papers: this item is included in nep-mic
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