Meetings and Mechanisms - 2023 - Peking University HSBC Business School(PHBS)

Meetings and Mechanisms

by Xiaoming Cai, Pieter Gautier*, Ronald Wolthoff

ARTICLE | International Economic Review | Vol.64, 2023

Abstract

This article shows how meeting frictions affect equilibrium trading mechanisms and allocations in an environment where identical sellers post mechanisms to compete for buyers with ex ante heterogeneous private valuations. Multiple submarkets can emerge, each consisting of all sellers posting a particular mechanism and the buyers who visit those sellers. Under mild conditions, high-valuation buyers are all located in the same submarket, and low valuation buyers can be in: (i) the same submarket, (ii) a different submarket, and (iii) a mixture of (i) and (ii). The decentralized equilibrium is efficient when sellers can post auctions with reserve prices or entry fees.

LINKS

CONTACT US

3D CAMPUS