How to segment a search market: information design and directed search

Teddy Mekonnen ()
Additional contact information
Teddy Mekonnen: Department of Economics, Brown University

Theoretical Economics, Forthcoming

Abstract: This paper examines when the public provision of information in search markets improves welfare. I consider a two-sided frictional search market in which buyers match with vertically differentiated sellers. The market is segmented into submarkets based on seller types. Such segmentation serves as a public signal that buyers use to direct their search. Given a segmentation, I characterize both the socially efficient and the equilibrium allocation of buyers across submarkets, and identify a Hosios-type condition under which the equilibrium allocation is efficient. I then analyze the design of surplus-maximizing segmentations, showing that the nature of search externalities determines when the constrained-efficient segmentation fully separates seller types or pools them into at most a binary partition.

Keywords: Directed search; market segmentation; information design (search for similar items in EconPapers)
JEL-codes: C78 D62 D83 (search for similar items in EconPapers)
Date: 2025-09-16
References: Add references at CitEc
Citations:

Downloads: (external link)
http://econtheory.org/ojs/index.php/te/article/viewForthcomingFile/5350/43004/1 Working paper version. Paper will be copyedited and typeset before publication. (application/pdf)

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:the:publsh:5350

Access Statistics for this article

Theoretical Economics is currently edited by Federico Echenique, Mira Frick, Pablo Kurlat, Juuso Toikka, Rakesh Vohra

More articles in Theoretical Economics from Econometric Society
Bibliographic data for series maintained by Editor Theoretical Economics ( this e-mail address is bad, please contact ).