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Meeting technologies and optimal trading mechanisms in competitive search markets

Author

Listed:
  • 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 satisfied. 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 14-15, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:14-15
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    References listed on IDEAS

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    More about this item

    Keywords

    Search frictions; Matching function; Meeting technology; Competing mechanisms;
    All these keywords.

    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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