We compare equilibrium allocations in directed search models where prices are determined alternatively by posting and by competing auctions, with the following results. With finite numbers of players, sellers' expected payoffs are higher when all sellers auction than when all sellers post. This difference is largest in the 2-by-2 case, where payoffs to sellers are 1/3 higher if they auction. The difference in the payoffs decreases rapidly with market size and vanishes in the limit "large" economy. When sellers can choose whether to post prices or auction in the 2-by-2- case, all combinations (auction-auction, post-post, and auction-post) can occur in equilibrium if sellers choose mechanism and price simultaneously. However, if sellers choose mechanism before price then the dominant strategy equilibrium has both sellers auctioning.
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Benoit Julien & John Kennes & Ian King, 2000.
"Bidding for Labor,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 3(4), pages 619-649, October.
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Julien, B. & Kennes, J. & King, I., 1998.
"Bidding for Labour,"
Discussion Papers
dp98-03, Department of Economics, Simon Fraser University.
Burguet, Roberto & Sakovics, Jozsef, 1999.
"Imperfect Competition in Auction Designs,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 231-47, February.
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