Delay in Trade Networks

Thành Nguyen, Vijay Subramanian, Randall Berry

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


We study decentralized markets involving producers and consumers that are facilitated by middlemen. We do this by analyzing a noncooperative networked bargaining game. We assume a complete information setup wherein all the agents know the structure of the network, the values of the consumers, and the transaction costs involved but allow for some search friction when either producers or consumers trade with middlemen. In such a setting, we show that sunk cost problems and a heterogeneous network can give rise to delay or failure in negotiation, and therefore reduce the total trade capacity of the network. In the limiting regime of extremely patient agents, we provide a sharp characterization of the trade pattern and the segmentation of these markets.

Original languageEnglish (US)
Pages (from-to)646-661
Number of pages16
JournalOperations Research
Issue number3
StatePublished - May 1 2016


  • Noncooperative bargaining
  • Supply chain networks
  • Trade volume

ASJC Scopus subject areas

  • Computer Science Applications
  • Management Science and Operations Research


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