Intermediation Free Equilibrium in Resource Transmission Games∗

We provide a unified framework for the study of the allocation of a divisible resource from a planner to agents via intermediaries. Our framework incorporates several models ranging from the transmission of resources to agents connected in a network to the allocation of costs in spanning trees. Intermediaries are able to transmit the resource to a group of agents depending on the intermediaries selected as well as the fees posted by them for the use of their abilities. The planner selects a group of intermediaries to transmit the resource to agents, and chooses a feasible allocation that maximizes his utility over the resource allocated to the agents as well as the fees paid to the intermediaries selected. We provide necessary and sufficient conditions for the existence of a perfectly competitive equilibrium, where the intermediaries used by the planner earn zero profit (intermediation free equilibrium). Multiplicity of equilibria may occur. We provide the necessary and sufficient conditions for the uniqueness of a robust equilibrium, whereby the intermediaries who are not used by the planner charge zero price.