A theory of buyer-seller networks

Journal Article (Journal Article)

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.

Full Text

Duke Authors

Cited Authors

  • Kranton, RE; Minehart, DF

Published Date

  • January 1, 2001

Published In

Volume / Issue

  • 91 / 3

Start / End Page

  • 485 - 508

International Standard Serial Number (ISSN)

  • 0002-8282

Digital Object Identifier (DOI)

  • 10.1257/aer.91.3.485

Citation Source

  • Scopus