Wholesale Transactions under Economies and Diseconomies of Scope in Search Activities in a Model of Search and Match

Shigeru Makioka
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Shigeru Makioka: Faculty of Economics, Keio University

No 2015-006, Keio-IES Discussion Paper Series from Institute for Economics Studies, Keio University

Abstract: In a basic model of search and match, thanks to the assumption that producer-sellers and consumer-buyers pay constant search costs per one unit of a single type of goods, it suffices to consider the retail transactions between producer-sellers and consumer-buyers. We extend this model to allow for the possibilities of economies and diseconomies of scopes in search activities over two types goods. We show that producer-sellers make wholesale transactions with one another when the benefit of economies of scope is strong enough. But when the benefit of economies of scope in search activities for buyers compensates the loss of diseconomies of scope in search activities for sellers, there are multiple equilibria: Matched pairs of producer-sellers always make wholesale transactions in one equilibrium. But they never make those in another, so that there only are retail transactions.

Keywords: search and match; economies of scope; wholesale transaction (search for similar items in EconPapers)
JEL-codes: D83 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2015-03
New Economics Papers: this item is included in nep-com and nep-dge
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