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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- Douglas Gale, 2010.
"Limit theorems for markets with sequential bargaining,"
Levine's Working Paper Archive
621, David K. Levine.
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- Arthur J. Hosios, 1990. "On The Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 279-298.
- Gale, Douglas & Sabourian, Hamid, 2006.
"Markov equilibria in dynamic matching and bargaining games,"
Games and Economic Behavior,
Elsevier, vol. 54(2), pages 336-352, February.
- Gale, D. & Sabourian, H., 2002. "Markov Equilibria of Dynamic Matching and Bargaining Games," Working Papers 02-07, C.V. Starr Center for Applied Economics, New York University.
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"Strategic Foundations of General Equilibrium,"
Cambridge University Press, number 9780521644105, June.
- 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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