Sorting and Decentralized Price Competition

• 成果类型: Article
• 署名作者: Eeckhout, Jan; Kircher, Philipp
• 署名单位: University of Pennsylvania; Pompeu Fabra University; University of Oxford
• 刊物名称: ECONOMETRICA
• ISSN/ISSBN: 0012-9682
• DOI: 10.3982/ECTA7953
• 发表日期: 2010
• 页码: 539-574
• 关键词: Directed search; EFFICIENCY; equilibrium; MARKETS; MODEL

摘要

We investigate the role of search frictions in markets with price competition and how it leads to sorting of heterogeneous agents. There are two aspects of value creation: the match value when two agents actually trade and the probability of trading governed by the search technology. We show that positive assortative matching obtains when complementarities in the former outweigh complementarities in the latter. This happens if and only if the match-value function is root-supermodular, that is, its nth root is supermodular, where n reflects the elasticity of substitution of the search technology. This condition is weaker than the condition required for positive assortative matching in markets with random search.