Sorting versus screening: Search frictions and competing mechanisms

Jan Eeckhout and Philipp Kircher

Journal of Economic Theory, 2010, vol. 145, issue 4, 1354-1385

Abstract: In a market where sellers compete by posting trading mechanisms, we allow for a general search technology and show that its features crucially affect the equilibrium mechanism. Price posting prevails when meetings are rival, i.e., when a meeting by one buyer reduces another buyer's meeting probability. Under price posting buyers reveal their type by sorting ex-ante. Only if the meeting technology is sufficiently non-rival, price posting is not an equilibrium. Multiple buyer types then visit the same sellers who screen ex-post through auctions.

Keywords: Competing; mechanism; design; Matching; function; Meeting; function; Sorting; Screening; Price; posting; Auctions (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (64)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:145:y:2010:i:4:p:1354-1385

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