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Bargaining in Small Dynamic Markets

Francesc Dilme

No 193, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: This paper studies trade in endogenously evolving markets exhibiting few traders at any given point in time. Traders arrive in the market and bargain until they complete a trade. We find that, unlike large markets, small markets feature trade delay and price dispersion, even when sellers and buyers are homogeneous and matching frictions are small. We characterize transaction prices as a function of the endogenous evolution of the market composition and economic conditions, providing several novel comparative statics results. Our analysis highlights the need to incorporate sub-market structures into the theoretical study of job, real estate, and rental markets, where trade opportunities are typically constrained by both the geographical location and individual characteristics of each trader.

Keywords: Small dynamic markets; decentralized bargaining; trade delay. (search for similar items in EconPapers)
JEL-codes: C73 C78 D53 G12 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2022-08
New Economics Papers: this item is included in nep-gth and nep-mst
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https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_193_2022.pdf First version, 2022 (application/pdf)

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Journal Article: Bargaining in small dynamic markets (2023) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:193

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