Inefficiencies in Networked Markets

Networked Markets and Relational Contracts

Empirical studies of commercial relationships between firms reveal that (i) suppliers encounter situations in which they can gain in the short run by acting opportunistically—for example, delivering a lower quality than promised after being paid; and (ii) good conduct is sustained not exclusively by formal contracts but through informal relationships and the expectation of future business. In s...

Cooperation in partly observable networked markets

We present a model of repeated games in large two-sided networks between clients and agents in the presence of third-party observability networks via which clients share information about past transactions. The model allows us to characterize cooperation networks networks in which each agent cooperates with every client that is connected to her. To this end, we show that: [1] the incentives of ...

Constrained hierarchical networked optimization for energy markets

In this paper, we propose a distributed control strategy for the design of an energy market. The method relies on a hierarchical structure of aggregators for the coordination of prosumers (agents which can produce and consume energy). The hierarchy reflects the voltage level separations of the electrical grid and allows aggregating prosumers in pools, while taking into account the grid operatio...

Dynamic Inefficiencies in Insurance Markets: Evidence from Long-Term Care Insurance.

The Role of Search Friction in Networked Markets’ Stationarity

The advent of the Internet and the resulting electronic revolution has resulted in incredible speed-ups in trade and commerce. Many time-consuming and arduous transactions have been greatly simplified and sped-up. In modern electronic financial markets, for example, high frequency trading has become a critical component and has resulted in a greatly increased volume of trade. Given the recent f...