Over-the-counter markets are at the center of the post-crisis global reform of the financial system. We show how the size and structure of such markets can undergo rapid and extensive changes when participants engage in portfolio compression, a post-trade netting technology. Tightly-knit and...

This paper explores the possibility of privately inefficient job separations due to bargaining friction and its implications for the unemployment dynamics. I propose a simple specification of bargaining friction by including bargaining wedges in the standard Nash bargaining model. Such...

We consider bilateral non-cooperative bargaining on the division of a surplus. Compared to the canonical bargaining game in the tradition of Rubinstein, we introduce additional sources of friction into the bargaining process: Implementation of an agreement and consumption of the surplus can only...

I study bargaining over prices between two investors in financial over-the-counter markets with asymmetric information. I focus on environments in which an asset owner has private information about both her liquidity state and asset quality, and so a buyer is uncertain about the owner's true...

To understand the illiquidity of the over-the-counter market when dealers and traders are in long-term relationships, I develop a framework to study the endogenous liquidity distortions resulting from the profit-maximizing, screening behavior of dealers. The dealer offers the trading mechanism...

This paper develops and estimates a search and bargaining model designed to measure the welfare loss associated with frictions in oligopoly markets with negotiated prices. We use the model to quantify the consumer surplus loss induced by the presence of search frictions in the Canadian mortgage...

I consider the model of expertise acquisition studied in Glode, Green, and Lowery (2012), under the alternative assumption that investment in expertise is unobservable. This model generates cross sectional variation in expertise levels and produces price dispersion

We investigate a partially directed search market where buyers search for sellers and then final prices are determined by ultimatum game bargaining. In the search stage of this game, sellers post intervals of possible surplus splits to attract buyers and then buyers approach one seller from whom...

This paper provides a solution for how to model bargaining in models with on-the-job search. The solution is based on wages being infrequently renegotiated. With renegotiation, the equilibrium wage distribution and the bargaining outcomes are both unique, and the model nests earlier models in...