Sorting versus screening: Search frictions and competing mechanisms
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.
Year of publication: |
2010
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Authors: | Eeckhout, Jan ; Kircher, Philipp |
Published in: |
Journal of Economic Theory. - Elsevier, ISSN 0022-0531. - Vol. 145.2010, 4, p. 1354-1385
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Publisher: |
Elsevier |
Keywords: | Competing mechanism design Matching function Meeting function Sorting Screening Price posting Auctions |
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