Strategic Bargaining and Competitive Bidding in a Dynamic Market Equilibrium

Melvyn Coles and Abhinay Muthoo

No 938, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper extends the bargaining and matching literature such as Rubinstein (1985) and Gale (1986 and 1987) by considering a new matching process. We assume that a central information agency exists, such as job centres and newspapers in the labour market, or real estate agents in the housing market, which puts potential traders into direct contact with each other. With agent heterogeneity, equilibrium trade is characterized by existing traders on the other side (since existing traders have already sampled and rejected each other). Two procedures of trade coexist, namely strategic bilateral bargaining and a competitive bidding process, depending on the number of potential matches a new trader obtains. We characterize the unique symmetric Markov Perfect equilibrium to this stochastic trading game.

Keywords: Matching; Perfect Equilibrium; Strategic Bargaining (search for similar items in EconPapers)
JEL-codes: C73 C78 (search for similar items in EconPapers)
Date: 1994-04
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=938 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Strategic Bargaining and Competitive Bidding in a Dynamic Market Equilibrium (1998)
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:cpr:ceprdp:938

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... pers/dp.php?dpno=938

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().