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Spatial Search

Author

Listed:
  • Cai, Xiaoming
  • Gautier, Pieter
  • Wolthoff, Ronald

Abstract

This paper considers a random search model where some locations provide sellers with better chances of meeting many buyers than other locations (for example popular shopping streets or the first page of a search engine). When sellers are heterogeneous in terms of the quality of their product and/or the probability that a given buyer likes their product, it is desirable that sellers of high-quality niche products sort into the best locations. We show that this does not always happen in a decentralized market. Finally, we allow for endogenous location distributions and show that more trades are realized when locations are similar (in which case the aggregate matching function is urn-ball) but that quality weighted trade can be higher when locations are heterogeneous.

Suggested Citation

  • Cai, Xiaoming & Gautier, Pieter & Wolthoff, Ronald, 2024. "Spatial Search," CEPR Discussion Papers 18858, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18858
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    References listed on IDEAS

    as
    1. Lester, Benjamin & Visschers, Ludo & Wolthoff, Ronald, 2015. "Meeting technologies and optimal trading mechanisms in competitive search markets," Journal of Economic Theory, Elsevier, vol. 155(C), pages 1-15.
    2. Helsley, Robert W. & Strange, William C., 1990. "Matching and agglomeration economies in a system of cities," Regional Science and Urban Economics, Elsevier, vol. 20(2), pages 189-212, September.
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    5. 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.
    6. Gautier, Pieter A. & Svarer, Michael & Teulings, Coen N., 2010. "Marriage and the city: Search frictions and sorting of singles," Journal of Urban Economics, Elsevier, vol. 67(2), pages 206-218, March.
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    More about this item

    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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