BARGAINING ECONOMIES WITH PATIENT AND IMPATIENT AGENTS - EQUILIBRIA AND INTERMEDIATION

This paper investigates the characteristics of steady-state equilibria in a bargaining economy in which there are both patient and impatient agents and the possibility of intermediation arising in such an econo my. The equilibrium in the unmediated economy is inefficient if the pr oportion of impatient agents is sufficiently high. There is a simple f ee mechanism, which induces patient and impatient agents to trade in s eparate groups, under which there is always an efficient equilibrium. Such separation is also induced by the option to trade at fixed prices , and profit-seeking intermediaries have an incentive to facilitate su ch trade. (C) 1996 Academic Press, Inc.