A Decentralized Market for a Perishable Good
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.
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Volume (Year): 7 (2007)
Issue (Month): 1 (February)
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References listed on IDEAS
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- Gale, D. & Sabourian, H., 2002. "Markov Equilibria of Dynamic Matching and Bargaining Games," Working Papers 02-07, C.V. Starr Center for Applied Economics, New York University.
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- Dale T. Mortensen & Randall Wright, 2002. "Competitive Pricing and Efficiency in Search Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 1-20, February.
- Arthur J. Hosios, 1990. "On The Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 279-298. Full references (including those not matched with items on IDEAS)
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