Bargaining and delay in Thin Markets

Francesc Dilme

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: This paper presents a model of a decentralized thin market with endogenous and stochastic arrival of traders. We obtain that trade delay and price dispersion persist even when sellers and buyers are homogeneous and bargaining frictions are small. We characterize the time-dependent transaction prices as a function of the dynamics of the number of traders in the market, and provide some comparative statics results. Our analysis illustrates the necessity to properly incorporating the submarket structure into the study of job and housing markets, where the trade opportunities are typically constrained both by each trader’s geographical location and individual characteristics.

Keywords: Thin markets; Decentralized bargaining; Trade delay (search for similar items in EconPapers)
JEL-codes: C73 C78 D53 G12 (search for similar items in EconPapers)
Pages: 41
Date: 2019-10
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2019_133

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