Sorting versus screening: search frictions and competing mechanisms

Citació

  • Eeckhout J, Kircher P. Sorting versus screening: search frictions and competing mechanisms. J Econ Theory. 2010;145(4):1354-85.

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Descripció

  • Resum

    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.
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