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A search model with match makers

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  • Shigeru Makioka

    (Keio University)

Abstract

We study a search model in which buyers and sellers can choose between a centralized market intermediated by match makers and a decentralized market of search and matching. In this model, there is also an equilibrium in which there are no transactions in the centralized market. Such equilibrium corresponds to the situation where there are no match makers. We compare lifetime utilities of buyers and sellers when there are transactions in the centralized market with those when there are no transactions in the centralized market. We find a case of coordination failure: some buyers and sellers choose to go to the centralized market even though the existence of competitive match makers does not make any buyers and sellers better off.

Suggested Citation

  • Shigeru Makioka, 2015. "A search model with match makers," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(2), pages 153-168, October.
    • Handle: RePEc:spr:etbull:v:3:y:2015:i:2:d:10.1007_s40505-014-0035-7
    DOI: 10.1007/s40505-014-0035-7
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    References listed on IDEAS

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    1. Daniel F. Spulber, 1996. "Market Microstructure and Intermediation," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 135-152, Summer.
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    4. Jianjun Miao, 2006. "A search model of centralized and decentralized trade," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(1), pages 68-92, January.
    5. Ettore Damiano & Hao Li, 2007. "Price discrimination and efficient matching," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(2), pages 243-263, February.
    6. Yavas, Abdullah, 1992. "Marketmakers versus matchmakers," Journal of Financial Intermediation, Elsevier, vol. 2(1), pages 33-58, March.
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    More about this item

    Keywords

    Search and match; Match maker; Welfare;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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