Information sharing and bargaining in buyer-seller networks

Arbeitspapier

This paper presents a model of strategic buyer-seller networks with information exchange between sellers. Prior to engaging in bargaining with buyers, sellers can share access to buyers for a negotiated transfer. We study how this information exchange affects overall market prices, volumes and welfare, given different initial market conditions and information sharing rules. In markets with homogeneous traders, sharing always increases total trade volume. The market reaches Walrasian trade volume when there are more buyers than sellers or when sellers have more bargaining power. In most cases, market surplus is completely reallocated to sellers. In the markets with heterogeneous traders, sharing may either increase or decrease total trade volume. When sellers have more bargaining power than buyers, information exchange leads to trade above the Walrasian level, thus leaving inefficiency only due to overproduction of high-cost sellers. As a result of information sharing, the buyers who value goods the least will be squeezed out from the market independent of their location and bargaining power. We also show that if, together with information exchange, sellers assign property rights on the information, exchange leads to lower volume and market prices than exchange without property rights.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Bank of Canada Staff Working Paper ; No. 2016-63

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Firm Behavior: Theory ; Network Formation and Analysis: Theory ; Cooperative Games ; Bargaining Theory; Matching Theory ; Oligopoly and Other Imperfect Markets
• Subject: Economic models ; Firm dynamics ; Market structure and pricing

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Priazhkina, Sofia ; Page, Frank H.
• Event: Veröffentlichung
• (who): Bank of Canada
• (where): Ottawa
• (when): 2016

Further information

• DOI: doi:10.34989/swp-2016-63
• Handle: http://hdl.handle.net/10419/171954
• Last update: 10.03.2025, 11:41 AM CET