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Search Frictions, Competing Mechanisms and Optimal Market Segmentation

Xiaoming Cai, Pieter Gautier () and Ronald Wolthoff ()

No 11310, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In a market in which sellers compete for heterogeneous buyers by posting mechanisms, we analyze how the properties of the meeting technology affect the allocation of buyers to sellers. We show that a separate submarket for each type of buyer is the efficient outcome if and only if meetings are bilateral. In contrast, a single market with all agents is optimal if and only if the meeting technology satisfies a novel condition, which we call "joint concavity". Both outcomes can be decentralized by sellers posting auctions combined with a fee that is paid by (or to) all buyers with whom the seller meets. Finally, we compare joint concavity to two other properties of meeting technologies, invariance and non rivalry, and explain the differences.

Keywords: competing mechanisms; matching function; meeting technology; search frictions (search for similar items in EconPapers)
JEL-codes: C78 D44 D83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ind and nep-mic
Date: 2016-06
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Related works:
Journal Article: Search frictions, competing mechanisms and optimal market segmentation (2017) Downloads
Working Paper: Search Frictions, Competing Mechanisms and Optimal Market Segmentation (2016) Downloads
Working Paper: Search Frictions, Competing Mechanisms and Optimal Market Segmentation (2016) Downloads
Working Paper: Search Frictions, Competing Mechanisms and Optimal Market Segmentation (2016) Downloads
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