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Author: Matthew R. Backus
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Matthew R. Backus
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Rupert Gatti
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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This paper develops a model of multi-commodity search, where a continuum of identical consumers search optimally (sequentially) and with strictly positive search costs for two types of commodities. A continuum of homogenous firms, having the same, constant, marginal costs, select and post prices for either one of the commodities types. It is shown that any equilibrium in this model will display price dispersion, with no two firms charging the same price with positive probability. A specific equilibrium is identified, and comparative statics conducted - showing that the equilibrium distribution of prices converges to the competitive price as the cost of search converges to zero. These results are generated without the need for any heterogeneity amongst agents, or sub-optimal search strategies, required for price dispersion in existing models, and suggest that Diamond's (1971) 'monopoly price paradox' is an artefact of his single-commodity search assumption. A further extension shows that, in the search equilibrium identified, homogeneous firms may optimally choose to adopt differing production techniques for a homogeneous commodity, and that multiple equilibria with differing levels of technological adoption may also result. The results highlight the importance the process of search may have, not only on prices, but also on the structure and the efficiency of the market in general.
Author: Mark Andrew Perutz
Publisher:
ISBN:
Category :
Languages : en
Pages : 74
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Author: Mateusz Myśliwski
Publisher:
ISBN:
Category :
Languages : en
Pages : 21
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We propose a non-sequential search model with a continuum of consumers and a finite number of firms. Both consumers and firms are heterogeneous. Consumers differ in search costs. Firms have private marginal costs of production. We show that an equilibrium price dispersion can arise in this model as firms employ a Bayesian Nash pricing strategy. We provide conditions to identify the model using price and another supply side data (such as market share). Our identification strategy is constructive. We derive the uniform rate of convergence of our estimator.
Author: Yingjuan Du
Publisher:
ISBN:
Category : Consumption (Economics)
Languages : en
Pages : 278
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In consumption goods markets, we observe both bargaining and searching. However, in this literature, very little work has been done to incorporate both features into one model. This study addresses this problem. In my first chapter, I add a bargaining parameter to a traditional sequential search model and solve for the new equilibrium in this set-up. Then, I do some comparative statics, changing the distribution of the bargaining parameter to see what happens to the equilibrium. Finally, I use the model to explain two seemingly contradicting empirical works in the literature of discrimination in the auto market. Ayres and Siegelman (1995), using data they collected from a controlled experiment, found that the initial offers for the minorities are higher. Yet Goldberg (1996), using consumer expenditure survey data (CES), reported that there is no significant difference between the final prices for minorities and non-minorities. My model reconciles these two results and shows that if minorities have a more dispersed bargaining parameter distribution and if the final transaction prices are the same at the mean level, then the initial offer distribution for the minorities first-order stochastically dominates that for the non-minorities. In my second chapter, I investigate how the bargaining process affects firms' offer distribution and thus the final price distribution. Based on Varian (1980), I add a bargaining parameter into the model, and solve for the new equilibrium in this set up. Then, I do some comparative statics, changing the distribution of the bargaining parameter to see what would happen to the equilibrium. This model yields the same results as the first chapter. In the third chapter, I applied my theoretical model to the automobile market, and empirically test the model. I used CES data, and my findings support the theoretical model. The minority dummies are not significant in determining the mean level of consumers' bargaining ability distribution, but are significantly positive in determining the variance of the distribution.
Author: Daniel Friedman
Publisher: Routledge
ISBN: 0429972164
Category : Social Science
Languages : en
Pages : 426
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This book focuses on markets organized as double auctions in which both buyers and sellers can submit bids and asks for standardized units of well-defined commodities and securities. It examines evidence from the laboratory and computer simulations.
Author: Dominic Coey
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages : 70
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Book Description
We present an equilibrium search model that parsimoniously rationalizes the use of auctions as a sales mechanism for new-in-box goods--a frequent occurrence in online retail markets--and analyze whether the existence of these auctions is welfare enhancing relative to a market consisting only of posted prices. Buyers have a deadline by which the good must be purchased, and sellers choose between auctions and posted-price mechanisms. As the deadline approaches, buyers increase their bids and are more likely to buy through posted-price listings. The model predicts equilibrium price dispersion even for new, homogeneous goods. Using data on one million auction and posted-price listings for new-in-box items on eBay.com, we find robust evidence consistent with our model. As predicted, bidders increase their bids from one auction to the next, equilibrium price dispersion exists, and auctions and posted-price listings coexist. Fitting the model to the data, we find that retail auctions increase total welfare by 1.8% of the average retail price if listing fees exactly cover platform costs, but reduce welfare by 2.3% if listing fees are pure profit.
Author: Erik Brynjolfsson
Publisher: MIT Press
ISBN: 9780262523301
Category : Business & Economics
Languages : en
Pages : 412
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Book Description
The rapid growth of electronic commerce, along with changes in information, computing, and communications, is having a profound effect on the United States economy. President Clinton recently directed the National Economic Council, in consultation with executive branch agencies, to analyze the economic implications of the Internet and electronic commerce domestically and internationally, and to consider new types of data collection and research that could be undertaken by public and private organizations. This book contains work presented at a conference held by executive branch agencies in May 1999 at the Department of Commerce. The goals of the conference were to assess current research on the digital economy, to engage the private sector in developing the research that informs investment and policy decisions, and to promote better understanding of the growth and socioeconomic implications of information technology and electronic commerce. Aspects of the digital economy addressed include macroeconomic assessment, organizational change, small business, access, market structure and competition, and employment and the workforce.
Author: Shouyong Shi
Publisher:
ISBN:
Category :
Languages : en
Pages : 45
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Many markets feature sequentially mixed search (SMS), which has directed search followed by noisy matching with multiple offers. I construct a simple model of SMS, establish existence of a unique equilibrium, and analyze the novel implications of the equilibrium on quantities and price dispersion. Moreover, I show that an increase in the meeting efficiency widens price dispersion. An extension that endogenizes search effort leads to constrained inefficiency of the equilibrium. Under a mild condition, policies that restore efficiency should lean against the wind to manage aggregate demand and supply.
Author: Michael R. Baye
Publisher: Elsevier
ISBN: 0762309717
Category : Business & Economics
Languages : en
Pages : 280
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Book Description
The first six chapters of the text examine four broad issues: the role of the Internet in fostering competition, its impact on price dispersion and on business-to-business transactions, and the importance of reputation and trust in the new economy. The last four chapters examine the impact of the Internet on the organization of firms, the efficiency of auctions in the Internet age, how consumers choose websites and acquire product information, and the growing problem of congestion on the Internet.
