Market networks: the core

We formulate and analyze market network systems parallel to market games in game theory. We study the structure of efficient and core networks in market network systems. More specifically, we show that if there is no trading cost, a complete network with type-based egalitarian allocations appears in the core of market network systems. Moreover, with heterogeneous trading costs, we show that an efficient network must take the form of a star network with the least-cost-trader as its central player and that the star network is the unique core network.