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A Decentralized Market for a Perishable Good

Author

Listed:
  • Anwar Ahmed W

    (University of Edinburgh, Ahmed.Anwar@ed.ac.uk)

  • Sákovics József

    (University of Edinburgh, jozsef.sakovics@ed.ac.uk)

Abstract

We characterize the steady state of a market with random matching and bargaining, where the sellers' goods can perish overnight. Generically, the quantity traded is suboptimal, prices are dispersed and there 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 the amount 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 on durable-good markets.

Suggested Citation

  • Anwar Ahmed W & Sákovics József, 2007. "A Decentralized Market for a Perishable Good," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-25, February.
    • Handle: RePEc:bpj:bejtec:v:7:y:2007:i:1:n:7
    DOI: 10.2202/1935-1704.1312
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    Cited by:

    1. Ponsatí­, Clara & Sákovics, József, 2008. "Queues, not just mediocrity: Inefficiency in decentralized markets with vertical differentiation," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 998-1014, July.
    2. Sjaak Hurkens & Nir Vulkan, 2015. "Dynamic matching and bargaining with heterogeneous deadlines," International Journal of Game Theory, Springer;Game Theory Society, vol. 44(3), pages 599-629, August.

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