The Long Side of the Market and the Short End of the Stick: Bargaining Power and Price Formation in Buyers', Sellers', and Balanced Markets
The determinants of bargaining power and price formation in a dynamic exchange market where new traders enter randomly over time are studied. When agents on the long side of the market possess the option to wait for the arrival of future partners, the terms of trade in the spot market must honor the value of this option. The equilibrium terms of trade are expressed in intuitive closed-form equations that highlight the distinct influences of short-run spot-market conditions and long-run market demographics. Copyright 1995, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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Professor of Economics
Taylor's primary research interest is microeconomic theory with emphasis on the areas of Industrial Organization, Political Economy, and the Theory of Contracts. He has worked on a variety of topics such as: the optimal design of research contests, the causes and timing of market crashes, and consumer privacy. Professor Taylor's research has been supported by grants from the National Science Foundation, the U.S. Department of Agriculture, and the Texas Higher Education Coordinating Board, am