Sorting versus screening: search frictions and competing mechanisms

Jan Eeckhout and Philipp Kircher

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In a market where sellers compete by posting trading mechanisms, we allow for a general search technology and show that its features crucially affect the equilibrium mechanism. Price posting prevails when meetings are rival, i.e., when a meeting by one buyer reduces another buyer's meeting probability. Under price posting buyers reveal their type by sorting ex-ante. Only if the meeting technology is sufficiently non-rival, price posting is not an equilibrium. Multiple buyer types then visit the same sellers who screen ex-post through auctions.

Keywords: Competing mechanism design; Matching function; Meeting function; Sorting; Screening; Price posting; Auctions (search for similar items in EconPapers)
JEL-codes: C78 D44 D82 (search for similar items in EconPapers)
Date: 2010-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (65)

Published in Journal of Economic Theory, July, 2010, 145(4), pp. 1354-1385. ISSN: 1095-7235

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Journal Article: Sorting versus screening: Search frictions and competing mechanisms (2010)
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