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Convergence to perfect competition of a dynamic matching and bargaining market with two-sided incomplete information and exogenous exit rate

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  • Satterthwaite, Mark
  • Shneyerov, Artyom

Abstract

Consider a decentralized, dynamic market with an infinite horizon and incomplete information in which buyers and sellers' values for the traded good are private and independently drawn. Time is discrete, each period has length [delta], and each unit of time a large number of new buyers and sellers enter the market. Within a period each buyer is matched with a seller and each seller is matched with zero, one, or more buyers. Every seller runs a first price auction with a reservation price and, if trade occurs, the seller and winning buyer exit with their realized utility. Traders who fail to trade either continue in the market to be rematched or exit at an exogenous rate. We show that in all steady state, perfect Bayesian equilibria, as [delta] approaches zero, equilibrium prices converge to the Walrasian price and realized allocations converge to the competitive allocation.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 63 (2008)
Issue (Month): 2 (July)
Pages: 435-467

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Handle: RePEc:eee:gamebe:v:63:y:2008:i:2:p:435-467

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Web page: http://www.elsevier.com/locate/inca/622836

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  4. Mark Satterthwaite & Artyom Shneyerov, 2007. "Dynamic Matching, Two-Sided Incomplete Information, and Participation Costs: Existence and Convergence to Perfect Competition," Econometrica, Econometric Society, vol. 75(1), pages 155-200, 01.
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Cited by:
  1. Athey, Susan & Miller, David A., 2007. "Efficiency in repeated trade with hidden valuations," Theoretical Economics, Econometric Society, vol. 2(3), September.
  2. Shneyerov, Art & Wong, Adam Chi Leung, 2007. "Bilateral Matching and Bargaining with Private Information," Microeconomics.ca working papers shneyerov-07-05-01-03-38-, Vancouver School of Economics, revised 01 May 2007.
  3. Artyom Shneyerov & Andras Niedermayer, 2011. "Search Brokers," 2011 Meeting Papers 89, Society for Economic Dynamics.
  4. Artyom Shneyerov & Adam Chi Leung Won, 2008. "The Rate of Convergence to Perfect Competition of Matching and Bargaining Mechanisms," Discussion Papers 1467, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Shneyerov, Artyom & Wong, Adam Chi Leung, 2011. "The role of private information in dynamic matching and bargaining: Can it be good for efficiency?," Economics Letters, Elsevier, vol. 112(1), pages 128-131, July.
  6. Said, Maher, 2011. "Sequential auctions with randomly arriving buyers," Games and Economic Behavior, Elsevier, vol. 73(1), pages 236-243, September.
  7. Dewan Mostafizur Rahman Author_Email: & Kohinur Akter, 2011. "Financial Liberalization And Interest Rate Convergence-An Empirical Study On Bangladesh," 2nd International Conference on Business and Economic Research (2nd ICBER 2011) Proceeding 2011-456, Conference Master Resources.

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