Location choice in two-sided markets with indivisible agents
AbstractConsider a model of location choice by two sorts of agents, called "buyers" and "sellers": In the first period agents simultaneously choose between two identical possible locations; following this, the agents at each location play some sort of game with the other agents there. Buyers prefer locations with fewer other buyers and more sellers, and sellers have the reverse preferences. We study the set of possible equilibrium sizes for the two markets, and show that two markets of very different sizes can co-exist even if larger markets are more efficient. This extends the analysis of Ellison and Fudenberg [2003. Quart. J. Econ. 118, 1249-1278], who ignored the constraint that the number of agents of each type in each market should be an integer, and instead analyzed the "quasi-equilibria" where agents are treated as infinitely divisible.
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Bibliographic InfoArticle provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 69 (2010)
Issue (Month): 1 (May)
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Web page: http://www.elsevier.com/locate/inca/622836
Agglomeration Two-sided markets Quasi-equilibrium Tipping Large finite economies Integer constraints Indivisibility Nonstandard analysis;
Other versions of this item:
- Robert M. Anderson & Glenn Ellison & Drew Fudenberg, 2005. "Location Choice in Two-Sided Markets with Indivisible Agents," Harvard Institute of Economic Research Working Papers 2056, Harvard - Institute of Economic Research.
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