EconPapers    
Economics at your fingertips  
 

Dynamic Pricing with Search Frictions

Daniel Garcia ()

Vienna Economics Papers from University of Vienna, Department of Economics

Abstract: This paper studies dynamic pricing in markets with search frictions. Sellers have a single unit of a good and post prices in every trading period. Buyers have to incur a search cost to match with a new seller and upon matching they observe the price and the realization of some idiosyncratic match value. There is no discounting but trade ends at an exogenously given deadline. We show that equilibrium involves trading in nitely many trading periods and the volume of trade increases over time. Under mild conditions on the buyerto- seller ratio and the distribution of valuations, prices decrease at increasing rates as the deadline approaches. We derive the gains from trade in equilibrium and their distribution between buyers and sellers. For the case in which the measures of buyers and sellers coincide, we provide a full characterization of the (unique) equilibrium for a class of distribution functions. We nally discuss implications for market design, including the use of platform fees and cancellation policies.

JEL-codes: D11 D83 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-dge, nep-ind and nep-mic
Date: 2017-05
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie1703.pdf (application/pdf)

Related works:
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:vie:viennp:1703

Access Statistics for this paper

More papers in Vienna Economics Papers from University of Vienna, Department of Economics
Series data maintained by Paper Administrator ().

 
Page updated 2017-11-18
Handle: RePEc:vie:viennp:1703