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Trade through endogenous intermediaries
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Scopus
University of the Thai Chamber of Commerce
Date Issued
2014
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University of the Thai Chamber of Commerce. Research Support Office
Abstract
We propose an intermediation core for an economy that explicitly specifies how traders organize themselves into trade cooperatives (intermediaries) and how trade between them gets carried out. The intermediation core allocations are closely related to the equilibrium allocations of a noncooperative intermediation game in Townsend (1983). We show that the intermediation core contains all subgame perfect equilibrium allocations of the intermediation game, similar to the inclusion ofcompetitive equilibrium allocations in the core usually studied. We identify intermediation core allocations that are also subgame perfect equilibrium allocations of the intermediation game in terms of the supporting intermediary structures. These results help to characterize subgame perfect equilibrium allocations of the intermediation game and to analyze their welfare and stabilityproperties.
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University of the Thai Chamber of Commerce
Bibliographic Citation
W.T. Kilenthong, Zhicheng Qin (2014) Trade through endogenous intermediaries. Journal of Mathematical Economics Vol.50 No.1, 262-268.
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