Transaction Costs Determine Success in Market Equilibria: Study Shows Impact.
The article explores how buyers and sellers interact in a market using a mix of cooperative and noncooperative strategies. By introducing transaction costs, the number of possible outcomes is reduced, but some equilibria still prevent trades from happening. Agent-based simulations show that as transaction costs increase, more traders fail to make deals, especially when costs are high. This suggests that eliminating certain outcomes to improve efficiency may only work when transaction costs are low.