Mediated trade across markets

Mediated trade across markets

Tuesday, 22 May 2018, 12:00-13:15

Room: Α2-1 (Μαρίας Μπουρμπάκη)

Presenter: Koutsougeras Leonidas, University of Manchester

We study mediated trade in a context where a commodity is traded simultaneously in several fragmented markets, where supply/demand orders are local ('island' markets). Demand sector of each market is summarized by a (inverse) demand function and the supply sector of each market features a fixed number of producers who offer the commodity in each market. Orders across markets are placed by intermediaries -entities who neither produce nor consume. A fixed number of intermediaries place supply/demand orders across markets. Both producers and intermediaries are strategic. We address the following Issues: 1. Does the 'Law of One Price' obtain? 2. What determines the flow of trade? Is it possible to predict the direction of trade from the market fundamentals? 3. Does the intermediation activity contribute to global output growth? 4. Does the intermediation activity increase global consumer surplus?

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