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fixedpriceequilibriaonpeer-to-peerplatforms
Journal article

Fixed price equilibria on peer‐to‐peer platforms: Lessons from time‐based currencies

BP2-STS

  • 11.02.2022
Published in:
  • Journal of Economic Behavior & Organization. - Elsevier BV. - 2022, vol. 195, p. 335-358
Platforms
P2P
Non-competitive prices
Welfare
Walrasian equilibrium
Networks
Organizational Behavior and Human Resource Management
Economics and Econometrics
English There are many online platforms for peer-to-peer exchange that introduce a platform-specific currency and fix prices to some extent. We model such platforms as pure exchange economies and characterize all fixed price equilibria. We demonstrate the inherent inefficiency following from the combination of fixed prices and voluntary trade and show that simple additional Pareto improving trades exist. While our theoretical analysis predicts that fixed prices lead to less trade than competitive prices, we also discuss some potential advantages of price restrictions, in particular, with respect to simplicity and fairness considerations. Strikingly, it is not those agents with the most attractive goods who have the highest willingness to participate in a fixed price platform. In an empirical illustration, we explore how these theoretical insights unfold in reality by describing patterns of several platforms covering around 100k transactions. This work is informative for the market design of peer-to-peer platforms and for markets with price restrictions more generally.
Faculty
Faculté des sciences économiques et sociales et du management
Department
Département d'économie politique
Language
  • English
Classification
Economics
License
CC BY
Open access status
hybrid
Identifiers
Persistent URL
https://folia.unifr.ch/unifr/documents/325292
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