A one-shot market with two sides is considered where everybody can be matched with at most one person. Individuals have to find trading partners on their own. Whether searching or waiting is an optimal strategy is the central question of this paper. In a market where searching and waiting are done exclusively by one market side, it is more efficient if the long market side searches. In a market where on both sides some individuals search and others stay put, there are also mixed equilibria which are even more efficient. The matching friction due to uncoordinated search by individuals implies that larger markets are in general less efficient than a collection of smaller markets.
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Paper provided by University of Bonn, Germany in its series Discussion Paper Serie B with number
462.
Length: pages Date of creation: Dec 1999 Date of revision: Handle: RePEc:bon:bonsfb:462
Contact details of provider: Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany Fax: +49 228 73 9221 Web page: http://www.bgse.uni-bonn.de/index.php?id=517
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Find related papers by JEL classification: C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory D40 - Microeconomics - - Market Structure and Pricing - - - General J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
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