Prices, delay, and the dynamics of trade

Moreno, D; Wooders, J

Prices, delay, and the dynamics of trade

Moreno, D Wooders, J

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Publication Type:: Journal Article
Citation:: Journal of Economic Theory, 2002, 104 (2), pp. 304 - 339
Issue Date:: 2002-01-01

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Field	Value	Language
dc.contributor.author	Moreno, D	en_US
dc.contributor.author	Wooders, J https://orcid.org/0000-0002-4206-7137	en_US
dc.date.issued	2002-01-01	en_US
dc.identifier.citation	Journal of Economic Theory, 2002, 104 (2), pp. 304 - 339	en_US
dc.identifier.issn	0022-0531	en_US
dc.identifier.uri	http://hdl.handle.net/10453/15738
dc.description.abstract	We characterize the dynamics of trading patterns and market composition when trade is bilateral, finding a trading partner is costly, prices are determined by bargaining, and preferences are private information. We show that equilibrium is inefficient and exhibits delay as sellers price discriminate between buyers with different values. As frictions vanish, transaction prices are asymptotically competitive and the welfare loss of inefficient trading approaches zero, even though the trading patterns continue to be inefficient and delay persists. Journal of Economic Literature Classification Numbers: D40, D50. © 2002 Elsevier Science (USA).	en_US
dc.relation.ispartof	Journal of Economic Theory	en_US
dc.relation.isbasedon	10.1006/jeth.2001.2822	en_US
dc.subject.classification	Economic Theory	en_US
dc.title	Prices, delay, and the dynamics of trade	en_US
dc.type	Journal Article
utslib.citation.volume	2	en_US
utslib.citation.volume	104	en_US
utslib.for	1401 Economic Theory	en_US
utslib.for	1499 Other Economics	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	closed_access
pubs.issue	2	en_US
pubs.publication-status	Published	en_US
pubs.volume	104	en_US

Abstract:

We characterize the dynamics of trading patterns and market composition when trade is bilateral, finding a trading partner is costly, prices are determined by bargaining, and preferences are private information. We show that equilibrium is inefficient and exhibits delay as sellers price discriminate between buyers with different values. As frictions vanish, transaction prices are asymptotically competitive and the welfare loss of inefficient trading approaches zero, even though the trading patterns continue to be inefficient and delay persists. Journal of Economic Literature Classification Numbers: D40, D50. © 2002 Elsevier Science (USA).

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http://hdl.handle.net/10453/15738