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Meeting Technologies and Optimal Trading Mechanisms in Competitive Search Markets

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  • Benjamin Lester
  • Ludo Visschers
  • Ronald Wolthoff

Abstract

In a market in which sellers compete by posting mechanisms, we allow for a general meeting technology and show that its properties crucially affect the mechanism that sellers select in equilibrium. In general, it is optimal for sellers to post an auction without a reserve price but with a fee, paid by all buyers who meet with the seller. However, we deï¬ne a novel condition on meeting technologies, which we call invariance, and show that meeting fees are equal to zero if and only if this condition is satisï¬ed. Finally, we discuss how invariance is related to other properties of meeting technologies identiï¬ed in the literature.

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Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-508.

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Length: Unknown pages
Date of creation: 02 Apr 2014
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Handle: RePEc:tor:tecipa:tecipa-508

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Keywords: search frictions; matching function; meeting technology; competing mechanisms;

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  1. Benjamin Lester & Ludo Visschers & Ronald Wolthoff, 2013. "Competing with asking prices," Working Papers 13-07, Federal Reserve Bank of Philadelphia.
  2. Ronald P. Wolthoff, 2011. "Applications and Interviews. A Structural Analysis of Two-Sided Simultaneous Search," Working Papers, Fondazione Eni Enrico Mattei 2011.86, Fondazione Eni Enrico Mattei.
  3. Moen, Espen R, 1997. "Competitive Search Equilibrium," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 105(2), pages 385-411, April.
  4. Susan Vroman & Pieter Gautier & James Albrecht, 2013. "Directed Search in the Housing Market," 2013 Meeting Papers, Society for Economic Dynamics 1370, Society for Economic Dynamics.
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  7. Kim, Kyungmin & Kircher, Philipp, 2013. "Efficient Competition through Cheap Talk: Competing Auctions and Competitive Search without Ex Ante Price Commitment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9785, C.E.P.R. Discussion Papers.
  8. Duffie, Darrell & Garleanu, Nicolae Bogdan & Pedersen, Lasse Heje, 2006. "Valuation in Over-the-Counter Markets," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5491, C.E.P.R. Discussion Papers.
  9. Mortensen, Dale T, 1982. "Property Rights and Efficiency in Mating, Racing, and Related Games," American Economic Review, American Economic Association, American Economic Association, vol. 72(5), pages 968-79, December.
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  11. Albrecht, James & Gautier, Pieter & Vroman, Susan, 2012. "A note on Peters and Severinov, “Competition among sellers who offer auctions instead of prices”," Journal of Economic Theory, Elsevier, Elsevier, vol. 147(1), pages 389-392.
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  19. Peters, Michael & Troncoso-Valverde, Cristian, 2010. "A Folk Theorem for Competing Mechanisms," Microeconomics.ca working papers, Vancouver School of Economics michael_peters-2010-17, Vancouver School of Economics, revised 19 Oct 2013.
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  21. Julien, Benoit & Kennes, John & King, Ian Paul, 2011. "Implementing the Mortensen rule in a frictional labor market," Journal of Macroeconomics, Elsevier, Elsevier, vol. 33(1), pages 80-91, March.
  22. Shi, Shouyong, 2001. "Frictional Assignment. I. Efficiency," Journal of Economic Theory, Elsevier, Elsevier, vol. 98(2), pages 232-260, June.
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  24. Ronald Wolthoff & Lodewijk Visschers & Benjamin Lester, 2012. "Asking Prices and Inspection Goods," 2012 Meeting Papers, Society for Economic Dynamics 792, Society for Economic Dynamics.
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  27. Hosios, Arthur J, 1990. "On the Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 57(2), pages 279-98, April.
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