Convergence of a Dynamic Matching and Bargaining Market with Two-sided Incomplete Information to Perfect Competition

Mark Satterthwaite and Artyom Shneyerov ()

Microeconomics.ca working papers from Vancouver School of Economics

Abstract: Consider a decentralized, dynamic market with an infinite horizon in which both buyers and sellers have private information concerning their values for the indivisible traded good. Time is discrete, each period has length ä, and each unit of time a large number of new buyers and sellers enter the market to trade. Within a period each buyer is matched with a seller and each seller is matched with zero, one, or more buyers. Every seller runs a first price auction with a reservation price and, if trade occurs, both the seller and winning buyer exit the market with their realized utility. Traders who fail to trade either continue in the market to be rematched or become discouraged with probability äµ (µ is the discouragement rate) and exit with zero utility. We characterize the steady-state, perfect Bayesian equilibria as ä becomes small and the market–in effect– becomes large. We show that, as ä converges to zero, equilibrium prices at which trades occur converge to the Walrasian price and the realized allocations converge to the competitive allocation.

Pages: 0 pages
Date: 2003-12-17, Revised 2003-12-17
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://microeconomics.ca/artyom_shneyerov/dup_dp0312.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Unavailable (http://microeconomics.ca/artyom_shneyerov/dup_dp0312.pdf [302 Found]--> https://match.microeconomics.ca/artyom_shneyerov/dup_dp0312.pdf)

Related works:
Working Paper: Convergence of a Dynamic Matching and Bargaining Market with Two-sided Incomplete Information to Perfect Competition (2003)
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:ubc:pmicro:shneyerov-03-12-17-09-36-43

Access Statistics for this paper

More papers in Microeconomics.ca working papers from Vancouver School of Economics
Bibliographic data for series maintained by Maureen Chin ().