IDEAS home Printed from https://ideas.repec.org/p/pur/prukra/1166.html

Trade Mechanism Selection in Markets with Frictions

Author

Listed:
  • Camera, Gabriele
  • Delacroix, Alain

Abstract

We endogenize the trade mechanism in a search economy with many homogenous sellers and many heterogeneous buyers of unobservable type. We study how heterogeneity and the traders continuation values which are endogenous influence the sellers choice of trade mechanism. Sellers trade off the probability of an immediate sale against the surplus expected from it, choosing whether to trade with everyone and how quickly. In equilibrium sellers may simply target one buyer type via non-negotiable offers (price posting), or may price discriminate (haggling). We also study when haggling generates trading delays. A price setting externality arises because of a strategic complementarity in the sellers pricing choices.

Suggested Citation

  • Camera, Gabriele & Delacroix, Alain, 2003. "Trade Mechanism Selection in Markets with Frictions," Purdue University Economics Working Papers 1166, Purdue University, Department of Economics.
    • Handle: RePEc:pur:prukra:1166
    as

    Download full text from publisher

    File URL: https://business.purdue.edu/research/Working-papers-series/Year-2004/1166%20Camera%20and%20Delacroix%20Trade%20Mechanism%20Selection%20in%20Markets%20with%20Frictions.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Leo Kaas & Carlos Carrillo-Tudela, 2011. "Wage Dispersion and Labor Turnover with Adverse Selection," 2011 Meeting Papers 1075, Society for Economic Dynamics.
    2. Gabriele Camera & Alain Delacroix, 2004. "Trade Mechanism Selection in Markets with Frictions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(4), pages 851-868, October.
    3. David Gill & John Thanassoulis, 2016. "Competition in Posted Prices with Stochastic Discounts," Economic Journal, Royal Economic Society, vol. 126(594), pages 1528-1570, August.
    4. Ennis, Huberto M., 2008. "Search, money, and inflation under private information," Journal of Economic Theory, Elsevier, vol. 138(1), pages 101-131, January.
    5. Gill, David & Thanassoulis, John, 2009. "The impact of bargaining on markets with price takers: Too many bargainers spoil the broth," European Economic Review, Elsevier, vol. 53(6), pages 658-674, August.
    6. Hermann Gartner & Christian Holzner, 2015. "Wage Posting as a Positive Selection Device: Theory and Empirical Evidence," CESifo Working Paper Series 5494, CESifo.
    7. Carrillo-Tudela, Carlos & Kaas, Leo, 2015. "Worker mobility in a search model with adverse selection," Journal of Economic Theory, Elsevier, vol. 160(C), pages 340-386.
    8. John Thanassoulis & David Gill, 2010. "The Optimal Marketing Mix of Posted Prices, Discounts and Bargaining," Economics Series Working Papers 479, University of Oxford, Department of Economics.
    9. Sandro Shelegia & Joshua Sherman, 2022. "Bargaining at Retail Stores: Evidence from Vienna," Management Science, INFORMS, vol. 68(1), pages 27-36, January.
    10. Masui, Makoto, 2011. "Jobs with different wage determination mechanisms, social efficiency and unemployment," Journal of the Japanese and International Economies, Elsevier, vol. 25(1), pages 56-75, March.
    11. Jacquet, Nicolas L. & Tan, Serene, 2012. "Wage-vacancy contracts and coordination frictions," Journal of Economic Theory, Elsevier, vol. 147(3), pages 1064-1104.
    12. Cynthia Doniger, 2023. "Wage Dispersion with Heterogeneous Wage Contracts," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 138-160, December.
    13. Anbarci, Nejat & Gomis-Porqueras, Pedro & Marcus, Pivato, 2012. "Formal and informal markets: A strategic and evolutionary perspective," MPRA Paper 42513, University Library of Munich, Germany.
    14. Nejat Anbarci & Pedro Gomis-Porqueras & Marcus Pivato, 2018. "Evolutionary stability of bargaining and price posting: implications for formal and informal activities," Journal of Evolutionary Economics, Springer, vol. 28(2), pages 365-397, April.
    15. David Gill & John Thanassoulis, 2013. "Competition in Posted Prices With Bargaining," Economics Series Working Papers 639, University of Oxford, Department of Economics.
    16. Xianwen Shi & Aloysius Siow, 2011. "Search Intermediaries," Working Papers tecipa-426, University of Toronto, Department of Economics.
    17. Xianwen Shi & Aloysius Siow, 2014. "Information externalities and intermediaries in frictional search markets," Canadian Journal of Economics, Canadian Economics Association, vol. 47(4), pages 1131-1152, November.
    18. David Gill & John Thanassoulis, 2007. "Too Many Bargainers Spoil The Broth: The Impact of Bargaining on Markets with Price Takers," Economics Series Working Papers 329, University of Oxford, Department of Economics.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pur:prukra:1166. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Business Webmaster (email available below). General contact details of provider: https://edirc.repec.org/data/kspurus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.