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Meeting Technologies and Optimal Trading Mechanisms in Competitive Search Markets

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Abstract

In a market in which sellers compete by posting mechanisms, we study how the properties of the meeting technology affect the mechanism that sellers select. In general, sellers have incentive to use mechanisms that are socially efficient. In our environment, sellers achieve this by posting an auction with a reserve price equal to their own valuation, along with a transfer that is paid by (or to) all buyers with whom the seller meets. However, we define a novel condition on meeting technologies, which we call "invariance," and show that the transfer is equal to zero if and only if the meeting technology satisfies this condition.

Suggested Citation

  • Benjamin Lester & Ludo Visschers & Ronald Wolthoff, 2014. "Meeting Technologies and Optimal Trading Mechanisms in Competitive Search Markets," Edinburgh School of Economics Discussion Paper Series 242, Edinburgh School of Economics, University of Edinburgh.
    • Handle: RePEc:edn:esedps:242
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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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