The provision of quality in a bilateral search market

Clara Ponsati and József Sákovics

Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: We accomplish two goals. First, we provide a non-cooperative foundation for the use of the Nash bargaining solution in search markets. This finding should help to close the rift between the search and the matching-and-bargaining literature. Second, we establish that the diversity of quality offered (at an increasing price-quality ratio) in a decentralized market is an equilibrium phenomenon - even in the limit as search frictions disappear.

Keywords: quality dispersion; Nash program; bilateral search (search for similar items in EconPapers)
JEL-codes: C78 L11 (search for similar items in EconPapers)
Pages: 22
Date: 2002-08
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Working Paper: The provision of quality in a bilateral search market (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:86

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