Spatial Search

Xiaoming Cai (), Pieter A. Gautier () and Ronald Wolthoff
Additional contact information
Xiaoming Cai: Peking University
Pieter A. Gautier: Vrije Universiteit Amsterdam

No 16824, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: search frictions; spatial equilibrium; sorting (search for similar items in EconPapers)
JEL-codes: C78 D44 D83 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2024-02
New Economics Papers: this item is included in nep-geo, nep-mic and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published - published in: Journal of Economic Theory, 2025, 224, 105976

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https://docs.iza.org/dp16824.pdf (application/pdf)

Related works:
Journal Article: Spatial search (2025)
Working Paper: Spatial Search (2024)
Working Paper: Spatial Search (2024)
Working Paper: Spatial Search (2024)
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