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About Market Structure

Author

Listed:
  • Klaus Kultti

    (University of Helsinki)

Abstract

I study an economy where sellers choose locations, and buyers choose which location to visit. All sellers in one location correspond to the Walrasian market while each seller in a separate location corresponds to the standard random matching model. Trades are consummated in auctions, and it turns out that the Walrasian market is not an equilibrium market structure. Rather, the sellers choose to distribute themselves in several locations endogenously creating the imperfectness of markets. I determine the number of sellers per location in equilibrium as a function of the ratio of buyers to sellers. (Copyright: Elsevier)

Suggested Citation

  • Klaus Kultti, 2003. "About Market Structure," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(1), pages 240-251, January.
  • Handle: RePEc:red:issued:v:6:y:2003:i:1:p:240-251
    DOI: 10.1016/S1094-2025(02)00016-9
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    File URL: http://dx.doi.org/10.1016/S1094-2025(02)00016-9
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    References listed on IDEAS

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    1. Peter Diamond, 1990. "Pairwise Credit in Search Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 285-319.
    2. Julien, Benoit & Kennes, John & King, Ian, 2000. "Matching Foundations," Working Papers 189, Department of Economics, The University of Auckland.
    3. Michael Peters, 1999. "Competition among mechanism designers in a common value environment," Review of Economic Design, Springer;Society for Economic Design, vol. 4(3), pages 273-292.
    4. Ricardo Lagos, 2000. "An Alternative Approach to Search Frictions," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 851-873, October.
    5. Melvyn G. Coles & Jan Eeckhout, 2000. "Heterogeneity as a coordination device," Economics Working Papers 510, Department of Economics and Business, Universitat Pompeu Fabra.
    6. Ken Burdett & Melvyn G. Coles, 1997. "Marriage and Class," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 141-168.
    7. Kultti, Klaus, 1999. "Equivalence of Auctions and Posted Prices," Games and Economic Behavior, Elsevier, vol. 27(1), pages 106-113, April.
    8. Herreiner, Dorothea K, 1999. "The Decision to Seek or to Be Sought," Discussion Paper Serie B 462, University of Bonn, Germany.
    9. Jansen, Marcel, 2010. "Job auctions and hold-ups," Labour Economics, Elsevier, vol. 17(3), pages 608-619, June.
    10. Lu, Xiaohua & McAfee, R. Preston, 1996. "The Evolutionary Stability of Auctions over Bargaining," Games and Economic Behavior, Elsevier, vol. 15(2), pages 228-254, August.
    11. Kiyotaki, Nobuhiro & Wright, Randall, 1993. "A Search-Theoretic Approach to Monetary Economics," American Economic Review, American Economic Association, vol. 83(1), pages 63-77, March.
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    Citations

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    Cited by:

    1. Nie, Pu-yan, 2009. "Commitment for storable goods under vertical integration," Economic Modelling, Elsevier, vol. 26(2), pages 414-417, March.

    More about this item

    Keywords

    Market structure; Matching; Auctions;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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