Location choice in two-sided markets with indivisible agents
Consider a model of location choice by two sorts of agents, called "buyers" and "sellers": In the first period agents simultaneously choose between two identical possible locations; following this, the agents at each location play some sort of game with the other agents there. Buyers prefer locations with fewer other buyers and more sellers, and sellers have the reverse preferences. We study the set of possible equilibrium sizes for the two markets, and show that two markets of very different sizes can co-exist even if larger markets are more efficient. This extends the analysis of Ellison and Fudenberg [2003. Quart. J. Econ. 118, 1249-1278], who ignored the constraint that the number of agents of each type in each market should be an integer, and instead analyzed the "quasi-equilibria" where agents are treated as infinitely divisible.
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References listed on IDEAS
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- Glenn Allison & Drew Fudenberg, 2002.
Harvard Institute of Economic Research Working Papers
1960, Harvard - Institute of Economic Research.
- Glenn Ellison & Drew Fudenberg & Markus Mobius, 2010. "Competing Auctions," Levine's Working Paper Archive 506439000000000092, David K. Levine.
- Ellison, Glenn & Fudenberg, Drew & Mobius, Markus, 2010. "Competing Auctions," Staff General Research Papers 32106, Iowa State University, Department of Economics.
- Ellison, Glenn & Mobius, Markus & Fudenberg, Drew, 2004. "Competing Auctions," Scholarly Articles 3043414, Harvard University Department of Economics.
- Fudenberg, Drew & Ellison, Glenn, 2003.
"Knife-Edge or Plateau: When Do Market Models Tip?,"
3160493, Harvard University Department of Economics.
- Glenn Ellison & Drew Fudenberg, 2003. "Knife Edge of Plateau: When Do Market Models Tip?," NBER Working Papers 9528, National Bureau of Economic Research, Inc.
- Glenn Ellison & Drew Fudenberg, 2003. "Knife-Edge or Plateau: When do Market Models Tip?," Levine's Working Paper Archive 506439000000000098, David K. Levine.
- Marco Pagano, 1989. "Trading Volume and Asset Liquidity," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 255-274.
- Grodal, Birgit, 1975. "The rate of convergence of the core for a purely competitive sequence of economies," Journal of Mathematical Economics, Elsevier, vol. 2(2), pages 171-186.
- Dierker, Hildegard, 1975. "Equilibria and core of large economies," Journal of Mathematical Economics, Elsevier, vol. 2(2), pages 155-169.
- repec:tpr:qjecon:v:118:y:2003:i:4:p:1249-1278 is not listed on IDEAS
- Paul Krugman, 1990.
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NBER Working Papers
3275, National Bureau of Economic Research, Inc.
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