Abstract
There are many online platforms for peer-to-peer exchange that introduce a platform-specific currency and fix prices to some extent. We model such platforms as pure exchange economies and characterize all fixed price equilibria. We demonstrate the inherent inefficiency following from the combination of fixed prices and voluntary trade and show that simple additional Pareto improving trades exist. While our theoretical analysis predicts that fixed prices lead to less trade than competitive prices, we also discuss some potential advantages of price restrictions, in particular, with respect to simplicity and fairness considerations. Strikingly, it is not those agents with the most attractive goods who have the highest willingness to participate in a fixed price platform. In an empirical illustration, we explore how these theoretical insights unfold in reality by describing patterns of several platforms covering around 100k transactions. This work is informative for the market design of peer-to-peer platforms and for markets with price restrictions more generally.
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