Abstract
In a market in which sellers compete for heterogeneous buyers by posting mechanisms, we analyze how the properties of the meeting technology affect the allocation of buyers to sellers. We show that a separate submarket for each type of buyer is the efficient outcome if and only if meetings are bilateral. In contrast, a single market with all agents is optimal if and only if the meeting technology satisfies a novel condition, which we call “joint concavity.” Both outcomes can be decentralized by sellers posting auctions combined with a fee that is paid by (or to) all buyers with whom the seller meets. Finally, we compare joint concavity to two other properties of meeting technologies, invariance and non-rivalry, and explain the differences.
| Original language | English |
|---|---|
| Pages (from-to) | 453-473 |
| Number of pages | 21 |
| Journal | Journal of Economic Theory |
| Volume | 169 |
| Early online date | 19 Mar 2017 |
| DOIs | |
| Publication status | Published - May 2017 |
Funding
The idea for this paper grew out of earlier fruitful collaboration with James Albrecht, Ben Lester, Ludo Visschers and Susan Vroman. We thank the editor, the associate editor, three referees, Philipp Kircher, Guido Menzio, Michael Peters, Gábor Virág, and various seminar and conference participants for valuable comments. Ronald Wolthoff gratefully acknowledges financial support from the Connaught Fund at the University of Toronto.
| Funders | Funder number |
|---|---|
| Connaught Fund at the University of Toronto | |
| Economic and Social Research Council | ES/L009633/1 |
Keywords
- Competing mechanisms
- Heterogeneity
- Matching function
- Meeting technology
- Search frictions