Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/253516 
Authors: 
Year of Publication: 
2022
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 17 [Issue:] 1 [Publisher:] The Econometric Society [Place:] New Haven, CT [Year:] 2022 [Pages:] 57-87
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
I develop a theory of intermediation in a market where agents meet bilaterally to trade and buyers cannot commit to payments. Some agents observe the past trading history of traders in the market. These informed agents can secure trades by punishing traders who previously defaulted. The punishing strategy affects equilibrium prices and determines which trades are hindered by the risk of default. Intermediation is a robust equilibrium feature, generated by asymmetric punishing strategies that yield informed agents either more effective opportunities to trade or the ability to extract more surplus in trades.
Subjects: 
Intermediation
limited commitment
bilateral trade
trade network
JEL: 
D83
D85
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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