Spatial Search

Xiaoming Cai, Pieter Gautier and Ronald Wolthoff
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Xiaoming Cai: Peking University HSBC Business School

No 24-015/VIII, Tinbergen Institute Discussion Papers from Tinbergen Institute

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)
Date: 2024-02-28
New Economics Papers: this item is included in nep-geo, nep-mic and nep-ure
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https://papers.tinbergen.nl/24015.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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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20240015

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