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Equilibrium in Auction and Bargaining Markets When Agents Can Wait and Search


  • Kultti, Klaus
  • Takalo, Tuomas


The paper studies two market structures and two modes of trade. The agents, buyers and sellers, can choose whether to stay or search. The meetings take place randomly, and trades are consummated by auction or by bargaining. There are altogether four possible markets but in equilibrium at most two markets are active simultaneously. There is almost always a unique evolutionary stable equilibrium which consists of an auction market when the numbers of buyers and sellers differ greatly, and two simultaneous auction markets when the numbers are relatively close. Copyright 1999 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

Suggested Citation

  • Kultti, Klaus & Takalo, Tuomas, 1999. "Equilibrium in Auction and Bargaining Markets When Agents Can Wait and Search," Bulletin of Economic Research, Wiley Blackwell, vol. 51(3), pages 171-205, July.
  • Handle: RePEc:bla:buecrs:v:51:y:1999:i:3:p:171-205

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    References listed on IDEAS

    1. Shin, Hyun Song, 1993. "Measuring the Incidence of Insider Trading in a Market for State-Contingent Claims," Economic Journal, Royal Economic Society, vol. 103(420), pages 1141-1153, September.
    2. Ron Bird & Michael McCrae, 1987. "Tests of the Efficiency of Racetrack Betting Using Bookmaker Odds," Management Science, INFORMS, vol. 33(12), pages 1552-1562, December.
    3. Jullien, Bruno & Salanie, Bernard, 1994. "Measuring the Incidence of Insider Trading: A Comment on Shin," Economic Journal, Royal Economic Society, vol. 104(427), pages 1418-1419, November.
    4. Williams, Leighton Vaughan & Paton, David, 1997. "Why Is There a Favourite-Longshot Bias in British Racetrack Betting Markets?," Economic Journal, Royal Economic Society, vol. 107(440), pages 150-158, January.
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    Cited by:

    1. Klaus Kultti & Antti Miettunen & Tuomas Takalo & Juha Virrankoski, 2009. "Who Searches?," The Japanese Economic Review, Japanese Economic Association, vol. 60(2), pages 152-171.
    2. Halko, Marja-Liisa & Kultti, Klaus & Niinimaki, Juha-Pekka, 2007. "Evolutionary stability of trading rules in an urn-ball matching model," Research in Economics, Elsevier, vol. 61(1), pages 11-15, March.

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