Evolution of Trading Structures

This paper reviews the evolution of trading structures by examining two pertinent strands in the literature on economics with interacting agents, one, works that presume a specified topology of interactions among agents, and two, works that let random mechanisms determine that topology. The papr reviews interactive discrete choice models in isotropic settings and proposes extensions within certain stylized anisotopic settings which are particularly interesting for economists. In particular, circular patterns of interaction highlight the role of money and credit; tree-type settings depict Walrasian interactions. The paper suggests that the random topology of interaction approach, which as employed analyses of sizes of trading gorups and thus exploit the full range of possible topological properties of trading structures. The paper proposes an integration of those approaches which is intended to exploit their natural complementaries. In the simplest possible version, our sythesis involves individual decisions and expectations, randomness, and nature combinng to fix an initial "primordial" topology of interaction. The dynamics of interaction move the economy from then on. The evolution of trading structures depends criticlaly upon multiplicity and stability properties of equilibrium configurations of the interaction model. The paper addresses a number of additional topics, including matching models, spatial aspects of the evolution of trading structures and issues of statistical inference.

[1]  F. Newman.  Lectures On Political Economy , 1851 .

[2]  M. Kendall.  Theoretical Statistics , 1956, Nature.

[3]  H. Bamber.  Wage–Price Spiral , 1964 .

[4]  P. L. Dobruschin.  The Description of a Random Field by Means of Conditional Probabilities and Conditions of Its Regularity , 1968 .

[5]  R. Dobrushin.  The problem of uniqueness of a gibbsian random field and the problem of phase transitions , 1968 .

[6]  F. Spitzer.  Markov Random Fields and Gibbs Ensembles , 1971 .

[7]  C. Preston.  Gibbs States on Countable Sets , 1974 .

[8]  H. Föllmer.  Random economies with many interacting agents , 1974 .

[9]  J. Spencer.  Probabilistic Methods in Combinatorics , 1974 .

[10]  Gibbs states on countable sets: Index , 1974 .

[11]  D. Griffeath,et al.  Introduction to Random Fields , 2020, 2007.09660.

[12]  J. Henderson,et al.  Economic theory and the cities , 1977 .

[13]  Daniel McFadden,et al.  Modelling the Choice of Residential Location , 1977 .

[14]  Andrew Postlewaite,et al.  Barriers to trade and disadvantageous middlemen: Nonmonotonicity of the core , 1978 .

[15]  T. Schelling.  Micromotives and Macrobehavior , 1978 .

[16]  C. Pissarides,et al.  Job Matchings with State Employment Agencies and Random Search , 1979 .

[17]  Bela Bollobas,et al.  Graph theory , 1979 .

[18]  J. Laurie Snell,et al.  Markov Random Fields and Their Applications , 1980 .

[19]  D. McFadden.  Econometric Models of Probabilistic Choice , 1981 .

[20]  B. Allen.  A Stochastic Interactive Model for the Diffusion of Information , 1982 .

[21]  Olivier J. Blanchard,et al.  Price Asynchronization and Price Level Inertia , 1982 .

[22]  Beth E Allen.  Some Stochastic Processes of Interdependent Demand and Technological Diffusion of an Innovation Exhibiting Externalities Among Adopters , 1982 .

[23]  Steven R. Lerman,et al.  Hedonic theory, bid rents, and willingness-to-pay: Some extensions of Ellickson's results , 1983 .

[24]  A. Kirman.  Communication in markets: A suggested approach☆ , 1983 .

[25]  B. Bollobás.  The evolution of random graphs , 1984 .

[26]  P. Erdos,et al.  On the evolution of random graphs , 1984 .

[27]  L. de Haan,et al.  A Spectral Representation for Max-stable Processes , 1984 .

[28]  J. Kadane.  Structural Analysis of Discrete Data with Econometric Applications , 1984 .

[29]  Increasing returns and the foundation of unemployment theory , 1985 .

[30]  Boyan Jovanovic.  Aggregate Randomness in Large Noncooperative Games , 1985 .

[31]  R. Ellis,et al.  Entropy, large deviations, and statistical mechanics , 1985 .

[32]  A. Kirman,et al.  Stochastic Communication and Coalition Formation , 1986 .

[33]  Peter Whittle,et al.  Systems in stochastic equilibrium , 1986 .

[34]  Boyan Jovanovic,et al.  Micro Shocks and Aggregate Risk , 1987 .

[35]  I. Evstigneev.  Stochastic extremal problems and the strong Markov property of random fields , 1988 .

[36]  Joel E. Cohen,et al.  Threshold phenomena in random structures , 1988, Discret. Appl. Math..

[37]  Hans-Otto Georgii,et al.  Gibbs Measures and Phase Transitions , 1988 .

[38]  Controlled Random Fields on an Oriented Graph , 1989 .

[39]  Stephen Pudney,et al.  Modelling Individual Choice: The Econometrics of Corners, Kinks, and Holes , 1991 .

[40]  C. Sims,et al.  Output Persistence, Economic Structure, and the Choice of Stabilization Policy , 1989 .

[41]  P. Diamond,et al.  The Aggregate Matching Function , 1989 .

[42]  H. Haller.  Large random graphs in pseudo-metric spaces , 1990 .

[43]  Yannis M Ionnides.  Trading Uncertainty and Market Form , 1990 .

[44]  C. A. Pissarides,et al.  Equilibrium Unemployment Theory , 1990 .

[45]  Steven N. Durlauf.  Path Dependence in Aggregate Output , 1991 .

[46]  Controlled random Telds on graphs and stochas-tic models of economic equilibrium , 1991 .

[47]  Stuart A. Kauffman,et al.  The origins of order , 1993 .

[48]  William A. Brock,et al.  Understanding macroeconomic time series using complex systems theory , 1991 .

[49]  John Rust,et al.  Estimation of Dynamic Structural Models: Problems and Prospects , 1991 .

[50]  C. Manski.  Identification of Endogenous Social Effects: The Reflection Problem , 1993 .

[51]  Steven N. Durlauf.  Multiple Equilibria and Persistence in Aggregate Fluctuations , 1991 .

[52]  Richard T. Boylan.  Laws of large numbers for dynamical systems with randomly matched individuals , 1992 .

[53]  S. Durlauf.  A theory of persistent income inequality , 1992 .

[54]  Michael I. Taksar,et al.  Stochastic equilibria on graphs,I , 1992 .

[55]  I. Gilboa,et al.  A Model of Random Matching , 1992 .

[56]  A. Kirman.  Whom Or What Does the Representative Individual Represent , 1992 .

[57]  Glenn Ellison.  Learning, Local Interaction, and Coordination , 1993 .

[58]  S. Durlauf.  Neighborhood Feedbacks, Endogenous Stratification, and Income Inequality , 1993 .

[59]  William A. Brock,et al.  PATHWAYS TO RANDOMNESS IN THE ECONOMY: EMERGENT NONLINEARITY AND CHAOS IN ECONOMICS AND FINANCE , 1993 .

[60]  P. Krugman.  On the number and location of cities , 1993 .

[61]  L. Blume.  The Statistical Mechanics of Strategic Interaction , 1993 .

[62]  R. Gilles,et al.  Modelling of Economies with Relational Constraints on Coalition Formation , 1994 .

[63]  John K. Dagsvik,et al.  Discrete and Continuous Choice, Max-Stable Processes, and Independence from Irrelevant Attributes , 1994 .

[64]  R. Gilles,et al.  Imperfections and Behavior in Economic Organizations , 1994 .

[65]  Paul Krugman,et al.  Complex landscapes in economic geography , 1994 .

[66]  Hans Haller.  Topologies as Trade Infrastructures , 1994 .

[67]  W. Arthur,et al.  Increasing Returns and Path Dependence in the Economy , 1996 .

[68]  Martin L. Weitzman,et al.  Monopolistic Competition with Endogenous Specialization , 1994 .

[69]  Markov Fields over Countable Partially Ordered Sets: Extrema and Splitting , 1994 .

[70]  Kathleen M. Carley,et al.  Metric inference for social networks , 1994 .

[71]  Richard T. Boylan.  Continuous Approximation of Dynamical Systems with Randomly Matched Individuals , 1995 .

[72]  William A. Brock,et al.  Discrete Choice with Social Interactions , 2001 .

[73]  K Nasmyth,et al.  Evolution of the cell cycle. , 1995, Philosophical transactions of the Royal Society of London. Series B, Biological sciences.

[74]  L. Tesfatsion.  HOW ECONOMISTS CAN GET ALIFE , 1995 .

[75]  Bilateral interactions and aggregate fluctuations , 1996 .

[76]  Masanao Aoki,et al.  New Approaches to Macroeconomic Modeling , 1996 .

[77]  L. Tesfatsion.  A Trade Network Game With Endogenous Partner Selection , 1997 .

[78]  J. Bouchaud,et al.  Herd Behavior and Aggregate Fluctuations in Financial Markets , 1997 .

[79]  Alan Kirman,et al.  Economies with Interacting Agents , 1998 .