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Bilateral Matching and Bargaining with Private Information

Artyom Shneyerov () and Chi Leung Wong

Microeconomics.ca working papers from Vancouver School of Economics

Abstract: We explore the role of private information in bilateral matching and bargaining. Our model is a replica of Mortensen and Wright (2002), but with private information. A simple necessary and sufficient condition on the parameters of the model for existence of equilibrium with entry is obtained. As in Mortensen and Wright (2002), we find that equilibrium is unique and has the property that every meeting results in trade when the discount rate is sufficiently small. There are also equilibria in which not every meeting results in trade. All equilibria converge to perfect competition as the frictions of search costs and discounting are removed. We find that private information may deter entry. Because of matching externalities, this entry-deterring effect of private information may be welfare-enhancing.

Keywords: Matching and Bargaining; Search; Foundations for Perfect Competi- tion; Two-sided Incomplete Information (search for similar items in EconPapers)
JEL-codes: C73 C78 D83 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2007-05-01, Revised 2007-05-01
New Economics Papers: this item is included in nep-gth
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Related works:
Journal Article: Bilateral matching and bargaining with private information (2010) Downloads
Working Paper: Bilateral Matching and Bargaining with Private Information (2007) Downloads
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