Meeting Technologies and Optimal Trading Mechanisms in Competitive Search Marks

Ronald Wolthoff, Ludo Visschers and Benjamin Lester

No 188, 2014 Meeting Papers from Society for Economic Dynamics

Abstract: In many markets, sellers advertise their good with an asking price. This is a price at which the seller will take his good off the market and trade immediately, though it is understood that a buyer can submit an offer below the asking price and that this offer may be accepted if the seller receives no better offers. Despite their prevalence in a variety of real world markets, asking prices have received little attention in the academic literature. We construct an environment with a few simple, realistic ingredients and demonstrate that using an asking price is optimal: it is the pricing mechanism that maximizes sellers' revenues and it implements the efficient outcome in equilibrium. We provide a complete characterization of this equilibrium and use it to explore the positive implications of this pricing mechanism for transaction prices and allocations.

Date: 2014
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Related works:
Journal Article: Meeting technologies and optimal trading mechanisms in competitive search markets (2015)
Working Paper: Meeting technologies and optimal trading mechanisms in competitive search markets (2014)
Working Paper: Meeting Technologies and Optimal Trading Mechanisms in Competitive Search Markets (2014)
Working Paper: Meeting technologies and optimal trading mechanisms in competitive search markets (2014)
Working Paper: Meeting technologies and optimal trading mechanisms in competitive search markets (2014)
Working Paper: Meeting Technologies and Optimal Trading Mechanisms in Competitive Search Markets (2014)
Working Paper: Meeting Technologies and Optimal Trading Mechanisms in Competitive Search Markets (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed014:188

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