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Sequentially Mixed Search and Equilibrium Price Dispersion

Author

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  • Shouyong Shi

    (Pennsylvania State University)

Abstract

Many markets feature sequentially mixed search (SMS), which has directed search in the first stage followed by noisy matching with multiple offers in the second stage. I construct a simple model of SMS, establish existence of a unique equilibrium, analyze how the two stages of SMS interact to affect quantities and price dispersion, and conduct comparative statics with respect to the meeting efficiency and the economic condition. By extending the model to endogenize search effort, I show that the equilibrium is not constrained socially efficient. Policies are introduced to restore efficiency and to manage aggregate demand and supply.

Suggested Citation

  • Shouyong Shi, 2019. "Sequentially Mixed Search and Equilibrium Price Dispersion," 2019 Meeting Papers 322, Society for Economic Dynamics.
    • Handle: RePEc:red:sed019:322
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    References listed on IDEAS

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    Cited by:

    1. Kennes, John & le Maire, Daniel & Roelsgaard, Sebastian T., 2020. "Equivalence of canonical matching models," Games and Economic Behavior, Elsevier, vol. 124(C), pages 169-182.

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