Search Frictions, Competing Mechanisms and Optimal Market Segmentation

Arbeitspapier

In a market in which sellers compete for heterogeneous buyers by posting mechanisms, we analyze how the properties of the meeting technology affect the allocation of buyers to sellers. We show that a separate submarket for each type of buyer is the efficient outcome if and only if meetings are bilateral. In contrast, a single market with all agents is optimal if and only if the meeting technology satisfies a novel condition, which we call "joint concavity." Both outcomes can be decentralized by sellers posting auctions combined with a fee that is paid by (or to) all buyers with whom the seller meets. Finally, we compare joint concavity to two other properties of meeting technologies, invariance and non-rivalry, and explain the differences.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 16-036/VI

Classification and Topics

• Classification: Wirtschaft ; Bargaining Theory; Matching Theory ; Auctions ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
• Subject: search frictions ; matching function ; meeting technology ; competing mechanisms ; heterogeneity

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Cai, Xiaoming ; Gautier, Pieter ; Wolthoff, Ronald
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/145343
• Last update: 31.03.2031, 12:27 PM CEST