This dissertation comprises three papers that are concerned with the implications of strategic interactions between a finite set of agents in private goods economies. One form of strategic behavior I consider arises in a social network when the consumption decisions of agents are influenced by those around them. The other form of strategic behavior I consider arises when agents bargain with one another.

The first paper focuses on undirected networks in which consumers care about the average of their neighbors’ consumption. The main contribution is to show how social networks affect equilibrium prices. I show that if every consumer has the same number of neighbors, then each consumer’s influence on the market is independent of the number of neighbors. Due to the tradeoff between more neighbors responding and less sensitive responses, greater network intensity may not result in greater average influence of all consumers. In addition, I show that a consumer who is central in the network may not have the highest influence on the market because of the need to consider not only the number of neighbors that he has or his distances to other consumers, but also the number of neighbors that his neighbors have.

The second paper examines strategic consumption in a directed network. The main contribution is to show how directed networks affect equilibrium outcomes. I show how the critical and promising links, and the key players in a social network can be identified. In doing so, I introduce the impact centrality and reaction centrality measures, and show how these measures are used to determine the effects on aggregate centrality of removing any agent from the network, and of removing or adding any directed link.

The third paper considers bargaining under two-sided incomplete information in a market with multiple buyers and sellers, each with either high or low independent private values. I show that there exists a mechanism that guarantees efficient trading outcomes even when gains from trade are uncertain. The main contribution of this paper to show that a large number of traders is not necessary to guarantee efficient trading if there are at least as many sellers as there are buyers, and there is at least one low valuation buyer.