Equilibrium in a market with intermediation is Walrasian

Wooders, J

Equilibrium in a market with intermediation is Walrasian

Wooders, J

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Publication Type:: Journal Article
Citation:: Review of Economic Design, 1997, 3 (1), pp. 75 - 89
Issue Date:: 1997-01-01

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Field	Value	Language
dc.contributor.author	Wooders, J https://orcid.org/0000-0002-4206-7137	en_US
dc.date.issued	1997-01-01	en_US
dc.identifier.citation	Review of Economic Design, 1997, 3 (1), pp. 75 - 89	en_US
dc.identifier.issn	1434-4742	en_US
dc.identifier.uri	http://hdl.handle.net/10453/15745
dc.description.abstract	We show that a profit maximizing monopolistic intermediary may behave approximately like a Walrasian auctioneer by setting bid and ask prices nearly equal to Walrasian equilibrium prices. In our model agents choose to trade either through the intermediary or privately. Buyers (sellers) trading through the intermediary potentially trade immediately at the ask (bid) price, but sacrifice the spread as gains. A buyer or seller who trades privately shares all the gains to trade with this trading partner, but risks costly delay in finding a partner. We show that as the cost of delay vanishes, the equilibrium bid and ask prices converge to the Walrasian equilibrium prices. © Springer-Verlag 1997.	en_US
dc.relation.ispartof	Review of Economic Design	en_US
dc.relation.isbasedon	10.1007/s100580050006	en_US
dc.subject.classification	Economic Theory	en_US
dc.title	Equilibrium in a market with intermediation is Walrasian	en_US
dc.type	Journal Article
utslib.citation.volume	1	en_US
utslib.citation.volume	3	en_US
utslib.for	1402 Applied Economics	en_US
utslib.for	1401 Economic Theory	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	1	en_US
pubs.publication-status	Published	en_US
pubs.volume	3	en_US

Abstract:

We show that a profit maximizing monopolistic intermediary may behave approximately like a Walrasian auctioneer by setting bid and ask prices nearly equal to Walrasian equilibrium prices. In our model agents choose to trade either through the intermediary or privately. Buyers (sellers) trading through the intermediary potentially trade immediately at the ask (bid) price, but sacrifice the spread as gains. A buyer or seller who trades privately shares all the gains to trade with this trading partner, but risks costly delay in finding a partner. We show that as the cost of delay vanishes, the equilibrium bid and ask prices converge to the Walrasian equilibrium prices. © Springer-Verlag 1997.

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http://hdl.handle.net/10453/15745