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Meeting Technologies and Optimal Trading Mechanisms in Competitive Search Markets

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  • Benjamin Lester
  • Ludo Visschers
  • Ronald Wolthoff

Abstract

In a market in which sellers compete by posting mechanisms, we allow for a general meeting technology and show that its properties crucially affect the mechanism that sellers select in equilibrium. In general, it is optimal for sellers to post an auction without a reserve price but with a fee, paid by all buyers who meet with the seller. However, we define a novel condition on meeting technologies, which we call invariance, and show that meeting fees are equal to zero if and only if this condition is satidfied. Finally, we discuss how invariance is related to other properties of meeting technologies identified in the literature.

Suggested Citation

  • Benjamin Lester & Ludo Visschers & Ronald Wolthoff, 2014. "Meeting Technologies and Optimal Trading Mechanisms in Competitive Search Markets," Working Papers tecipa-508, University of Toronto, Department of Economics.
  • Handle: RePEc:tor:tecipa:tecipa-508
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Cai, Xiaoming & Gautier, Pieter A. & Wolthoff, Ronald P., 2017. "Search frictions, competing mechanisms and optimal market segmentation," Journal of Economic Theory, Elsevier, vol. 169(C), pages 453-473.
    2. Lester, Benjamin & Visschers, Ludo & Wolthoff, Ronald, 2017. "Competing with asking prices," Theoretical Economics, Econometric Society, vol. 12(2), May.
    3. Lester, Benjamin & Visschers, Ludo & Wolthoff, Ronald, 2015. "Dynamic Relational Contracts under Complete Information," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-51, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. James Albrecht & Pieter Gautier & Susan Vroman, 2016. "Directed Search in the Housing Market," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 19, pages 218-231, January.
    5. Mangin, Sephorah, 2017. "A theory of production, matching, and distribution," Journal of Economic Theory, Elsevier, vol. 172(C), pages 376-409.
    6. Gomis-Porqueras Pedro & Julien Benoît & Wang Liang, 2018. "Competitive Search with Ex-post Opportunism," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 18(1), pages 1-17, January.
    7. Piero Gottardi & Sarah Auster, 2016. "Competing Mechanisms in Markets for Lemons," 2016 Meeting Papers 264, Society for Economic Dynamics.
    8. Philippe Jehiel & Laurent Lamy, 2018. "A Mechanism Design Approach to the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 126(2), pages 735-760.
    9. Benoît Julien & Sephorah Mangin, 2016. "Efficiency in Search and Matching Models: A Generalized Hosios Condition," Monash Economics Working Papers 28-16, Monash University, Department of Economics.
    10. Cai, Xiaoming, 2015. "Minimum prices in a model with search frictions and price posting," Economics Letters, Elsevier, vol. 135(C), pages 61-64.
    11. Ronald Wolthoff, 2018. "Applications and Interviews: Firms’ Recruiting Decisions in a Frictional Labour Market," Review of Economic Studies, Oxford University Press, vol. 85(2), pages 1314-1351.
    12. Ronald Wolthoff & Pieter Gautier & Xiaoming Cai, 2016. "Inclusive versus Exclusive Markets:," 2016 Meeting Papers 262, Society for Economic Dynamics.
    13. Lester, Benjamin & Visschers, Ludo & Wolthoff, Ronald, 2015. "Dynamic Relational Contracts under Complete Information," SIRE Discussion Papers 2015-51, Scottish Institute for Research in Economics (SIRE).
    14. repec:aea:jeclit:v:55:y:2017:i:2:p:493-544 is not listed on IDEAS
    15. Peter Norman, 2017. "Matching with Frictions and Entry with Poisson Distributed Buyers and Sellers," 2017 Meeting Papers 1150, Society for Economic Dynamics.
    16. Xiaoming Cai & Pieter Gautier & Ronald Wolthoff, 2015. "Inclusive versus Exclusive Markets: Search Frictions and Competing Mechanisms," Working Papers tecipa-545, University of Toronto, Department of Economics.
    17. Gautier, Pieter A. & Moraga-González, José L. & Wolthoff, Ronald P., 2016. "Search costs and efficiency: Do unemployed workers search enough?," European Economic Review, Elsevier, vol. 84(C), pages 123-139.

    More about this item

    Keywords

    search frictions; matching function; meeting technology; competing mechanisms;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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