Intermediary networks under the rule of equi-repartition of profits
Intermediary networks under the rule of equi-repartition of profits

Summary/Abstract: This paper studies the stability, equilibrium and effi ciency of directed networks of trade intermediaries under a rule of equi-repartition of profits. This equi-repartition rule, although simple and natural, introduces complex topologic considerations from players. Core-periphery structures can arise endogenously and result in stable networks even assuming complete homogeneity of all agents in the network. The concept of network partition is introduced to provide examples of networks that could be seen as arising from the linking up of a set of disjoint networks in an endogenous manner. From an aggregate welfare perspective as well as sometimes from an individual perspective, leaving the linking up of those individually effi cient networks to each individual agent can result in an ineffi cient aggregate network, even if taken in isolation each pre-existing network is effi cient.

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