Search Frictions, Competing Mechanisms and Optimal Market Segmentation

Xiaoming Cai (), Pieter Gautier and Ronald Wolthoff
Additional contact information
Xiaoming Cai: Peking University

No 9950, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: 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.

Keywords: search frictions; matching function; meeting technology; heterogeneity; competing mechanisms (search for similar items in EconPapers)
JEL-codes: C78 D44 D83 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2016-05
New Economics Papers: this item is included in nep-gth, nep-ind, nep-lab, nep-mic and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published in: Journal of Economic Theory, 2017, 169, 453-473

Downloads: (external link)
https://docs.iza.org/dp9950.pdf (application/pdf)

Related works:
Journal Article: Search frictions, competing mechanisms and optimal market segmentation (2017)
Working Paper: Search Frictions, Competing Mechanisms and Optimal Market Segmentation (2016)
Working Paper: Search Frictions, Competing Mechanisms and Optimal Market Segmentation (2016)
Working Paper: Search Frictions, Competing Mechanisms and Optimal Market Segmentation (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp9950

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().