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Meetings and Mechanisms

Author

Listed:
  • Xiaoming Cai
  • Pieter Gautier
  • Ronald Wolthoff

Abstract

We analyze a market in which sellers compete for heterogeneous buyers by posting mechanisms. A general meeting technology governs how buyers and sellers meet. We introduce a one-to-one transformation of this meeting technology that helps to clarify and extend many of the existing results in the literature, which has focused on two special cases: urn-ball and bilateral meetings. We show that the optimal mechanism for sellers is to post auctions combined with a reserve price equal to their own valuation and an appropriate fee (or subsidy) which is paid by (or to) all buyers meeting the seller. Even when there are externalities in the meeting process, the equilibrium is efficient. Finally, we analyze the sorting patterns between heterogeneous buyers and sellers and show under which conditions high-value sellers attract more high-value buyers in expectation.

Suggested Citation

  • Xiaoming Cai & Pieter Gautier & Ronald Wolthoff, 2017. "Meetings and Mechanisms," Working Papers tecipa-588, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-588
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    Other versions of this item:

    • Xiaoming Cai & Pieter Gautier & Ronald Wolthoff, 2023. "Meetings And Mechanisms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 155-185, February.

    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. Auster, Sarah & Gottardi, Piero, 2024. "Sorting versus screening in decentralized markets with adverse selection," Journal of Economic Theory, Elsevier, vol. 220(C).
    3. Cai, Xiaoming & Gautier, Pieter & Wolthoff, Ronald, 2025. "Spatial search," Journal of Economic Theory, Elsevier, vol. 224(C).
    4. Gautier, Pieter A. & Moraga-González, José L., 2018. "Search intensity, wage dispersion and the minimum wage," Labour Economics, Elsevier, vol. 50(C), pages 80-86.
    5. Auster, Sarah & Gottardi, Piero, 2019. "Competing mechanisms in markets for lemons," Theoretical Economics, Econometric Society, vol. 14(3), July.
    6. James Albrecht & Xiaoming Cai & Pieter Gautier & Susan Vroman, 2024. "Competitive search with private information: Can price signal quality?," Tinbergen Institute Discussion Papers 24-054/VI, Tinbergen Institute.
    7. De Sinopoli, Francesco & Ferraris, Leo & Meroni, Claudia, 2024. "Poisson Search," Journal of Mathematical Economics, Elsevier, vol. 112(C).

    More about this item

    Keywords

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    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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