The Emergence of Market Structure

• 成果类型: Article
• 署名作者: Farboodi, Maryam; Jarosch, Gregor; Shimer, Robert
• 署名单位: Massachusetts Institute of Technology (MIT); Princeton University; University of Chicago
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdac014
• 发表日期: 2023
• 页码: 261-292
• 关键词: financial transaction taxes; Bid-ask spreads; information percolation; Network structure; liquidity; search; core; TOPOLOGY; MODEL

摘要

We study a model of over-the-counter trading in which ex ante identical traders invest in a contact technology and participate in bilateral trade. We show that a rich market structure emerges both in equilibrium and in an optimal allocation. There is continuous heterogeneity in market access under weak regularity conditions. If the cost per contact is constant, heterogeneity is governed by a power law and there are middlemen, market participants with unboundedly high contact rates who account for a positive fraction of meetings. Externalities lead to overinvestment in equilibrium, and policies that reduce investment in the contact technology can improve welfare. We relate our findings to important features of real-world trading networks.