A theory of buyer-seller networks
Abstract
This paper introduces a new model of exchange: networks, rather than markets, of buyers
and sellers. It begins with the empirically motivated premise that a buyer and seller
must have a relationship, a "link," to exchange goods. Networks - buyers, sellers,
and the pattern of links connecting them - are common exchange environments. This
paper develops a methodology to study network structures and explains why agents may
form networks. In a model that captures characteristics of a variety of industries,
the paper shows that buyers and sellers, acting strategically in their own self-interests,
can form the network structures that maximize overall welfare.
Type
Journal articlePermalink
https://hdl.handle.net/10161/1735Collections
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Rachel Kranton
James B. Duke Distinguished Professor of Economics
Rachel Kranton studies how institutions and the social setting affect economic outcomes.
She develops theories of networks and has introduced identity into economic thinking.
Her research contributes to many fields including microeconomics, economic development,
and industrial organization.
In Identity Economics, Rachel Kranton and collaborator George Akerlof, introduce a
general framework to study social norms and identity in economics.
In the economics of networks, Rachel Kranton develop

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