Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/222077
Authors: 
Fleiner, Tamás
Jagadeesan, Ravi
Jankó, Zsuzsanna
Teytelboym, Alexander
Year of Publication: 
2020
Series/Report no.: 
CERS-IE Working Papers No. CERS-IE WP - 2020/8
Abstract: 
We show how frictions and continuous transfers jointly affect equilibria in a model of matching in trading networks. Our model incorporates distortionary frictions such as transaction taxes, bargaining costs, and incomplete markets. When contracts are fully substitutable for firms, competitive equilibria exist and coincide with outcomes that satisfy a cooperative stability property called trail stabity. In the presence of frictions, competitive equilibria might be neither stable nor (constrained) Pareto-efficient. In the absence of frictions, on the other hand, competitive equilibria are stable and in the core, even if utility is imperfectly transferable.
Subjects: 
Trading networks
frictions
competitive equilibrium
matching with contracts
trail stabity
transaction taxes
commission
JEL: 
C62
C78
D47
D51
D52
L14
Document Type: 
Working Paper

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