Paper #510

Títol:

Heterogeneity as a coordination device

Autors:

Melvyn G. Coles i Jan Eeckhout

Data:

Febrer 2000

Resum:

A model of directed search with a finite number of buyers and sellers is considered, where sellers compete in direct mechanisms. Buyer heterogeneity and Nash equilibrium results in perfect sorting. The restriction to complementary inputs, that the match value function Q is supermodular, in addition coordinates the sellers’ strategies. In that case, equilibrium implements positive assortative matching, which is efficient and consistent with the stable (cooperative equilibrium) outcome. This provides a non-cooperative and decentralized solution for the Assignment Game. Conversely, if buyers are identical, no such coordination is possible, and there is a continuum of equilibria, one of which exhibits price posting, another yields competition in auctions.

Paraules clau:

Matching, assignment game, directed search, supermodularity, truthful equilibrium

Codis JEL:

C7, D4

Àrea de Recerca:

Microeconomia

Publicat a:

Journal of Economic Theory, 111, pp. 265-276, 2003
Amb el títol:
Indeterminacy and Directed Search

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