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Competitive Search with Ex-post Opportunism

Author

Listed:
  • Pere Gomis-Porqueras

    (Deakin University)

  • Benoit Julien

    (University of New South Wales)

  • Liang Wang

    (University of Hawaii Manoa)

Abstract

We consider a frictional market where buyers are uncoordinated and sellers can not commit to a per-unit price and quantity of a divisible good ex-ante. By doing so sellers can exploit their local monopoly power by adjusting prices or quantities depending on the case once the local demand is realized. We find that when sellers can adjust quantities ex-post, then there exists a unique symmetric equilibrium where the increase in the buyer-seller ratio leads to higher quantities and prices in equilibrium. When sellers post ex-ante quantities and adjust prices ex-post, a symmetric equilibrium does not exist.

Suggested Citation

  • Pere Gomis-Porqueras & Benoit Julien & Liang Wang, 2016. "Competitive Search with Ex-post Opportunism," Working Papers 201604, University of Hawaii at Manoa, Department of Economics.
  • Handle: RePEc:hai:wpaper:201604
    as

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    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_16-04.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Guerrieri, Veronica & Julien, Benoit & Kircher, Philipp & Wright, Randall, 2017. "Directed Search: A Guided Tour," CEPR Discussion Papers 12315, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Competitive Search; Price Posting; Quantity Posting;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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