Search and bargaining in large markets with homogeneous traders
AbstractWe study pair-wise decentralized trade in dynamic markets with homogeneous, non-atomic, buyers and sellers that wish to exchange one unit. Pairs of traders are randomly matched and bargaining a price under rules that offer the freedom to quit the match at any time. Market equilbria, prices and trades over time, are characterized. The asymptotic behavior of prices and trades as frictions (search costs and impatience) vanish, and the conditions for (non) convergence to walrasian prices are explored. As a side product of independent interest, we present a self-contained theory of non-cooperative bargaining with two-sided, time-varying, outside options.
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Bibliographic InfoPaper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 533.02.
Date of creation: 01 Sep 2001
Date of revision:
Bargaining; Market Equilibrium; Outside Options;
Other versions of this item:
- Ponsati Clara, 2004. "Search and Bargaining in Large Markets With Homogeneous Traders," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 4(1), pages 1-27, February.
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- D4 - Microeconomics - - Market Structure and Pricing
- D5 - Microeconomics - - General Equilibrium and Disequilibrium
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