This paper develops a model of intermediated exchange with budget-constrained traders who are embedded in a trading network. An experimental investigation confirms the theory's baseline predictions. Traders adopt monotone strategies with higher-budget intermediaries offering to pay more for...

We study an economy where intermediaries facilitate exchange between a supplier and consumers. The set of feasible transactions is characterized by a network and an efficient auction protocol sets prices. We examine trading networks compatible with a free-entry equilibrium. There is under-entry...

We develop a model of competing diffusions of goods on a social network. There are two types of goods and individuals: mass-market (more prevalent) and niche-market. We start with a general threshold rule and show that multiple equilibria prevail. Then, when everyone uses a single friend...

We study the problem of allocating multiple items to two agents whose cardinal preferences are private information. If money is available, Bayesian incentive compatibility and ex-ante Pareto efficiency can be achieved using the Expected Externality Mechanism (EEM). Absent money, under certain...

The audit policy of a tax authority can signal its audit effectiveness. We model this process and show that in limited circumstances an ineffective authority can masquerade as being effective. We show that high maximal penalties imply underreporting of income