 Who wants to be an auctioneer?Sergei Severinov and Gabor Virag Journal of Economic Theory, 2024, vol. 217, issue C Abstract: This paper endogenizes the decision whether to post a mechanism or to participate in another trader's mechanism in a competing mechanisms environment. With a population of heterogeneous buyers and sellers facing standard search frictions, each trader in our market has to decide whether to post a mechanism or to visit a mechanism posted by a trader on the other side of the market. We show that the equilibrium in this market is unique and is constrained efficient. Inefficient traders (low-value buyers and high-cost sellers) choose to visit with probability one, while more efficient traders randomize between posting and visiting. The resulting allocation differs substantially from the equilibrium allocation in the market where only one side can post mechanisms, especially when trader heterogeneity is significant. This suggests that decentralized marketplaces should allow participating buyers and sellers to self-select into making or receiving offers. We also provide conditions under which posting decisions are monotone, so that more efficient types post with higher probabilities than less efficient types. Keywords: Endogenous posting; Trading platforms; Directed search; Competing mechanisms (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:217:y:2024:i:c:s0022053124000267 DOI: 10.1016/j.jet.2024.105820 Access Statistics for this article Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell More articles in Journal of Economic Theory from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.