A decentralized market for a perishable good
AbstractWe characterize the steady state of a market with random matching and bargaining, where the sellers' goods can perish overnight. Generally, the quantity traded is suboptimal, prices are dispersed and their is a dead-weight loss caused by excess supply or demand. In the limit, as the cost of staying in the market tends to zero, only th amuount of trade tends to the efficient level, the other two non-competitive characteristics remain. We discuss the implications of these findings on the foundations of competitive equilibrium and on the robustness of the results in the literature of durable-goods markets.
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Bibliographic InfoPaper provided by Edinburgh School of Economics, University of Edinburgh in its series ESE Discussion Papers with number 141.
Date of creation: Mar 2006
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