Sorting and decentralized price competition
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- dc.contributor.author Eeckhout, Janca
- dc.contributor.author Kircher, Philipp Albert Theodorca
- dc.date.accessioned 2016-02-22T11:43:50Z
- dc.date.available 2016-02-22T11:43:50Z
- dc.date.issued 2010ca
- dc.description.abstract We investigate the role of search frictions in markets with price competition and how it leads to sorting of heterogeneous agents. There are two aspects of value creation: the match value when two agents actually trade and the probability of trading governed by the search technology. We show that positive assortative matching obtains when complementarities in the former outweigh complementarities in the latter. This happens if and only if the match-value function is root-supermodular, that is, its nth root is supermodular, where n reflects the elasticity of substitution of the search technology. This condition is weaker than the condition required for positive assortative matching in markets with random search.en
- dc.description.sponsorship The paper initially circulated under the title “The Sorting Effect of Price Competition.” We would like to thank numerous colleagues and seminar participants for insightful discussions and comments. We greatly benefited from comments by Ken Burdett, John Kennan, Stephan Lauer- mann, Benny Moldovanu, Michael Peters, Andrew Postlewaite, Shouyong Shi, Robert Shimer, and Randy Wright. Kircher gratefully acknowledges support from the National Science Foundation, Grant SES-0752076, and Eeckhout acknowledges support from the ERC, Grant 208068.en
- dc.format.mimetype application/pdfca
- dc.identifier.citation Eeckhout J, Kircher P. Sorting and decentralized price competition. Econometrica. 2010;78(2):539-74ca
- dc.identifier.doi http://dx.doi.org/10.3982/ECTA7953
- dc.identifier.issn 0012-9682ca
- dc.identifier.uri http://hdl.handle.net/10230/25921
- dc.language.iso engca
- dc.publisher Econometric Societyca
- dc.relation.ispartof Econometrica. 2010;78(2):539-74en
- dc.relation.projectID info:eu-repo/grantAgreement/EC/FP7/208068ca
- dc.rights © The Econometric Society 2014. The copyright to this article is held by the Econometric Society, http://www.econometricsociety.org/. It may be downloaded, printed and reproduced only for personal or classroom use. Absolutely no downloading or copying may be done for, or on behalf of, any for-profit commercial firm or for other commercial purpose without the explicit permission of the Econometric Society. For this purpose, contact the Editorial Office of the Econometric Society at econometrica@econometricsociety.org.ca
- dc.rights.accessRights info:eu-repo/semantics/openAccessca
- dc.subject.keyword competitive search equilibriumen
- dc.subject.keyword directed searchen
- dc.subject.keyword sortingen
- dc.subject.keyword two-sided matchingen
- dc.subject.keyword decentralized price competitionen
- dc.subject.keyword complementarityen
- dc.subject.keyword root-supermodularityen
- dc.subject.other Preusca
- dc.subject.other Competència econòmica -- Models matemàticsca
- dc.title Sorting and decentralized price competitionca
- dc.type info:eu-repo/semantics/articleca
- dc.type.version info:eu-repo/semantics/publishedVersionca