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. Generally, 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-goods markets.
|Date of creation:||03 Mar 2006|
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- Gale, D. & Sabourian, H., 2003.
"Markov Equilibria in Dynamic Matching and Bargaining Games,"
Cambridge Working Papers in Economics
0322, Faculty of Economics, University of Cambridge.
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"Strategic Foundations of General Equilibrium,"
Cambridge University Press, number 9780521643306, November.
- Clara Ponsati & Jozsef Sakovics, 2005. "Markets for professional services: queues and mediocrity," ESE Discussion Papers 133, Edinburgh School of Economics, University of Edinburgh.
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- Douglas Gale, 2010.
"Limit theorems for markets with sequential bargaining,"
Levine's Working Paper Archive
621, David K. Levine.
- Gale, Douglas, 1987. "Limit theorems for markets with sequential bargaining," Journal of Economic Theory, Elsevier, vol. 43(1), pages 20-54, October.
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