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Meetings And Mechanisms

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  • Xiaoming Cai
  • Pieter Gautier
  • Ronald Wolthoff

Abstract

This article shows how meeting frictions affect equilibrium trading mechanisms and allocations in an environment where identical sellers post mechanisms to compete for buyers with ex ante heterogeneous private valuations. Multiple submarkets can emerge, each consisting of all sellers posting a particular mechanism and the buyers who visit those sellers. Under mild conditions, high‐valuation buyers are all located in the same submarket, and low valuation buyers can be in: (i) the same submarket, (ii) a different submarket, and (iii) a mixture of (i) and (ii). The decentralized equilibrium is efficient when sellers can post auctions with reserve prices or entry fees.

Suggested Citation

  • Xiaoming Cai & Pieter Gautier & Ronald Wolthoff, 2023. "Meetings And Mechanisms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 155-185, February.
    • Handle: RePEc:wly:iecrev:v:64:y:2023:i:1:p:155-185
    DOI: 10.1111/iere.12592
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    1. Cai, Xiaoming & Gautier, Pieter A. & Wolthoff, Ronald P., 2017. "Search frictions, competing mechanisms and optimal market segmentation," Journal of Economic Theory, Elsevier, vol. 169(C), pages 453-473.
    2. Auster, Sarah & Gottardi, Piero, 2019. "Competing mechanisms in markets for lemons," Theoretical Economics, Econometric Society, vol. 14(3), July.
    3. Gottardi, Piero & Auster, Sarah, 2022. "Sorting versus Screening in Decentralized Markets with Adverse Selection," CEPR Discussion Papers 17575, C.E.P.R. Discussion Papers.
    4. Gautier, Pieter A. & Moraga-González, José L., 2018. "Search intensity, wage dispersion and the minimum wage," Labour Economics, Elsevier, vol. 50(C), pages 80-86.

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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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