Search Frictions in Many‐to‐one Markets

Menghan Xu

Journal of Industrial Economics, 2024, vol. 72, issue 1, 284-326

Abstract: This article studies how search frictions affect competition and matching efficiency in many‐to‐one loan markets where a borrower requires support from multiple investors and coordination is desired but absent. We develop a dynamic search model and show that borrowers employ mixed strategies in quoting interest rates. More importantly, we find that in many‐to‐one markets, the rate dispersion caused by search frictions facilitates coordination and hence improves allocation efficiency relative to a no friction environment. Further, we empirically present stylized facts consistent with the theoretical predictions and structurally estimate the impact of search frictions on matching efficiency.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/joie.12357

Related works:
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:bla:jindec:v:72:y:2024:i:1:p:284-326

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0022-1821

Access Statistics for this article

Journal of Industrial Economics is currently edited by Pierre Regibeau, Yeon-Koo Che, Kenneth Corts, Thomas Hubbard, Patrick Legros and Frank Verboven

More articles in Journal of Industrial Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().