Fixed price equilibria on peer-to-peer platforms : lessons from time-based currencies

Chapter 3 deals with peer-to-peer platforms. There, participants can trade among each other via a platform specific currency, and price setting is often restricted to some extent. We model such platforms as pure exchange economies and characterize all fixed price equilibria. We discuss the inherent inefficiency following from the combination of fixed prices and voluntary trade and show that under the fix price regime simple additional Pareto improving trades exist. Our theoretical analysis predicts that fixed prices lead on the one hand to less trade, but on the other hand to lower inequality than flexible prices. We illustrate our findings with transaction data from several time exchange platforms.