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Multiplicity of Equilibria in Search Markets with Free Entry and Exit

Author

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  • Pedro Pereira

    (Autoridade da Concorrência)

Abstract

In this paper I identify an instance of multiplicity of equilibria, in search markets with production cost heterogeneity. I show that if firms may enter or exit the market, there may be multiple equilibria. I provide a monotonicity property, which is necessary and sufficient for uniqueness. Multiplicity vanishes as the search cost gets small. Multiple equilibria can be ranked by welfare.

Suggested Citation

  • Pedro Pereira, 2004. "Multiplicity of Equilibria in Search Markets with Free Entry and Exit," Working Papers 03, Portuguese Competition Authority.
    • Handle: RePEc:pca:wpaper:03
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    File URL: http://www.concorrencia.pt/download/WP03_MulTFF.pdf
    File Function: First version, 2004
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    Cited by:

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    2. Myśliwski, Mateusz & Rostom, May & Sanches, Fabio & Silva, Daniel & Srisuma, Sorawoot, 2025. "Identification and estimation of a search model with heterogeneous consumers and firms," Journal of Econometrics, Elsevier, vol. 249(PB).

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    Keywords

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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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