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Meeting Technologies and Optimal Trading Mechanisms in Competitive Search Markets

  • Benjamin Lester
  • Ludo Visschers
  • Ronald Wolthoff

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.

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Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-508.

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Length: Unknown pages
Date of creation: 02 Apr 2014
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Handle: RePEc:tor:tecipa:tecipa-508
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  1. Ronald Wolthoff & Lodewijk Visschers & Benjamin Lester, 2012. "Asking Prices and Inspection Goods," 2012 Meeting Papers 792, Society for Economic Dynamics.
  2. Ronald Wolthoff & Ludo Visschers & Benjamin Lester, 2015. "Competing with Asking Prices," 2015 Meeting Papers 644, Society for Economic Dynamics.
  3. Moen, Espen R, 1997. "Competitive Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 385-411, April.
  4. Wolthoff, Ronald P., 2010. "Applications and Interviews: A Structural Analysis of Two-Sided Simultaneous Search," IZA Discussion Papers 5416, Institute for the Study of Labor (IZA).
  5. Robert Shimer, 2001. "The Assignment of Workers to Jobs In an Economy with Coordination Frictions," NBER Working Papers 8501, National Bureau of Economic Research, Inc.
  6. Albrecht, James & Gautier, Pieter A. & Vroman, Susan, 2009. "Directed Search in the Housing Market," IZA Discussion Papers 4671, Institute for the Study of Labor (IZA).
  7. Pissarides, Christopher A, 1985. "Short-run Equilibrium Dynamics of Unemployment Vacancies, and Real Wages," American Economic Review, American Economic Association, vol. 75(4), pages 676-90, September.
  8. Michael Peters & Sergei Severinov, 1995. "Competition Among Sellers who offer Auctions Instead of Prices," Working Papers peters-95-02, University of Toronto, Department of Economics.
  9. Galenianos, Manolis & Kircher, Philipp, 2009. "Directed search with multiple job applications," Journal of Economic Theory, Elsevier, vol. 144(2), pages 445-471, March.
  10. Benoit Julien & John Kennes & Ian King, 2000. "Bidding for Labor," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(4), pages 619-649, October.
  11. Kiyotaki, Nobuhiro & Wright, Randall, 1993. "A Search-Theoretic Approach to Monetary Economics," American Economic Review, American Economic Association, vol. 83(1), pages 63-77, March.
  12. James Albrecht & Pieter Gautier & Susan Vroman, 2003. "Equilibrium Directed Search with Multiple Applications," Tinbergen Institute Discussion Papers 03-004/3, Tinbergen Institute, revised 14 Feb 2004.
  13. Albrecht, James & Gautier, Pieter & Vroman, Susan, 2012. "A note on Peters and Severinov, “Competition among sellers who offer auctions instead of prices”," Journal of Economic Theory, Elsevier, vol. 147(1), pages 389-392.
  14. Kircher, Philipp & Kim, Kyungmin, 2013. "Efficient Competition through Cheap Talk: Competing Auctions and Competitive Search without Ex Ante Price," SIRE Discussion Papers 2013-107, Scottish Institute for Research in Economics (SIRE).
  15. Kaas Leo, 2010. "Variable Search Intensity with Coordination Unemployment," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-33, October.
  16. Manolis Galenianos & Philipp Kircher, 2012. "On the game-theoretic foundations of competitive search equilibrium," LSE Research Online Documents on Economics 29707, London School of Economics and Political Science, LSE Library.
  17. Philipp Kircher, 2009. "Efficiency of Simultaneous Search," Journal of Political Economy, University of Chicago Press, vol. 117(5), pages 861-913, October.
  18. James Albrecht & Pieter A. Gautier & Susan Vroman, 2014. "Efficient Entry in Competing Auctions," American Economic Review, American Economic Association, vol. 104(10), pages 3288-96, October.
  19. Trejos, Alberto & Wright, Randall, 1995. "Search, Bargaining, Money, and Prices," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 118-41, February.
  20. Darrell Duffie & Nicolae Gârleanu & Lasse Heje Pedersen, 2007. "Valuation in Over-the-Counter Markets," Review of Financial Studies, Society for Financial Studies, vol. 20(6), pages 1865-1900, November.
  21. Arthur J. Hosios, 1990. "On The Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 279-298.
  22. repec:oup:restud:v:44:y:1977:i:3:p:465-91 is not listed on IDEAS
  23. Kyungmin Kim & Philipp Kircher, 2013. "Efficient Competition through Cheap Talk: Competing Auctions and Competitive Search without Ex Ante Price Commitment," ESE Discussion Papers 235, Edinburgh School of Economics, University of Edinburgh.
  24. Michael Peters, 1997. "A Competitive Distribution of Auctions," Review of Economic Studies, Oxford University Press, vol. 64(1), pages 97-123.
  25. repec:oup:restud:v:57:y:1990:i:2:p:279-98 is not listed on IDEAS
  26. Mortensen, Dale T, 1982. "Property Rights and Efficiency in Mating, Racing, and Related Games," American Economic Review, American Economic Association, vol. 72(5), pages 968-79, December.
  27. Julien, Benoit & Kennes, John & King, Ian Paul, 2011. "Implementing the Mortensen rule in a frictional labor market," Journal of Macroeconomics, Elsevier, vol. 33(1), pages 80-91, March.
  28. Shi, Shouyong, 2001. "Frictional Assignment. I. Efficiency," Journal of Economic Theory, Elsevier, vol. 98(2), pages 232-260, June.
  29. Peters, Michael & Troncoso-Valverde, Cristian, 2010. "A Folk Theorem for Competing Mechanisms," Microeconomics.ca working papers michael_peters-2010-17, Vancouver School of Economics, revised 19 Oct 2013.
  30. Kenneth Burdett & Shouyong Shi & Randall Wright, 2001. "Pricing and Matching with Frictions," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1060-1085, October.
  31. repec:oup:restud:v:64:y:1997:i:1:p:97-123 is not listed on IDEAS
  32. Michael Peters, 2010. "Noncontractible Heterogeneity in Directed Search," Econometrica, Econometric Society, vol. 78(4), pages 1173-1200, 07.
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