Search and bargaining in large markets with homogeneous traders
We study pair-wise decentralized trade in dynamic markets with homogeneous, non-atomic, buyers and sellers that wish to exchange one unit. Pairs of traders are randomly matched and bargaining a price under rules that offer the freedom to quit the match at any time. Market equilbria, prices and trades over time, are characterized. The asymptotic behavior of prices and trades as frictions (search costs and impatience) vanish, and the conditions for (non) convergence to walrasian prices are explored. As a side product of independent interest, we present a self-contained theory of non-cooperative bargaining with two-sided, time-varying, outside options.
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- Ariel Rubinstein & Asher Wolinsky, 1990.
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- JÕzsef SÂkovics & Clara PonsatÎ, 1998. "Rubinstein bargaining with two-sided outside options," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(3), pages 667-672.
- Merlo, Antonio & Wilson, Charles A, 1995. "A Stochastic Model of Sequential Bargaining with Complete Information," Econometrica, Econometric Society, vol. 63(2), pages 371-99, March.
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- Arial Rubinstein & Asher Wolinsky, 1985. "Equilibrium in a Market with Sequential Bargaining," Levine's Working Paper Archive 623, David K. Levine.
- Muthoo, Abhinay, 1993. "Sequential Bargaining and Competition," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(2), pages 353-63, April.
- Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics.
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