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A decentralized market for a perishable good

  • Ahmed Anwar

    ()

  • Jozsef Sakovics

    ()

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 their 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 th amuount 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 of durable-goods markets.

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Paper provided by Edinburgh School of Economics, University of Edinburgh in its series ESE Discussion Papers with number 141.

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Length: 23
Date of creation: Mar 2006
Date of revision:
Handle: RePEc:edn:esedps:141
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  1. Dale T. Mortensen & Randall Wright, 2002. "Competitive Pricing and Efficiency in Search Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 1-20, February.
  2. Gale, Douglas, 1987. "Limit theorems for markets with sequential bargaining," Journal of Economic Theory, Elsevier, vol. 43(1), pages 20-54, October.
  3. 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.
  4. repec:cup:cbooks:9780521643306 is not listed on IDEAS
  5. Hosios, Arthur J, 1990. "On the Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 279-98, April.
  6. Clara Ponsati & József Sákovics, 2005. "Markets for professional services: queues and mediocrity," ESE Discussion Papers 133, Edinburgh School of Economics, University of Edinburgh.
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