Auctions and posted prices in directed search equilibrium

Julien, Benoit, Kennes, John and King, Ian (2001) Auctions and posted prices in directed search equilibrium. Topics in Macroeconomics, 1 1: . doi:10.2202/1534-5998.1024


Author Julien, Benoit
Kennes, John
King, Ian
Title Auctions and posted prices in directed search equilibrium
Journal name Topics in Macroeconomics
ISSN 1534-5998
Publication date 2001-07-10
Year available 2001
Sub-type Article (original research)
DOI 10.2202/1534-5998.1024
Open Access Status Not Open Access
Volume 1
Issue 1
Total pages 1
Place of publication Berkeley, CA, United States
Publisher B E Press
Language eng
Abstract We compare equilibrium allocations in directed search models where prices are determined alternatively by posting and by competing auctions, with the following results. With finite numbers of players, sellers' expected payoffs are higher when all sellers auction than when all sellers post. This difference is largest in the 2-by-2 case, where payoffs to sellers are 1/3 higher if they auction. The difference in the payoffs decreases rapidly with market size and vanishes in the limit "large" economy. When sellers can choose whether to post prices or auction in the 2-by-2- case, all combinations (auction-auction, post-post, and auction-post) can occur in equilibrium if sellers choose mechanism and price simultaneously. However, if sellers choose mechanism before price then the dominant strategy equilibrium has both sellers auctioning.
Keyword Coordination
Competing Auctions
Matching
Directed Search
Q-Index Code CX
Q-Index Status Provisional Code
Institutional Status Non-UQ

Document type: Journal Article
Sub-type: Article (original research)
Collection: School of Economics Publications
 
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Created: Thu, 24 Mar 2016, 11:06:11 EST by Karen Warren on behalf of School of Economics