Uniqueness of Equilibrium in Directed Search Models

31 Pages Posted: 23 Dec 2014

See all articles by Jaehong Kim

Jaehong Kim

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE)

Gabriele Camera

Chapman University - Economic Science Institute; University of Bologna - Dept. of Economics

Date Written: November 24, 2013

Abstract

We study a decentralized trading model as in Peters (1984), where a finite number of heterogeneous capacity-constrained sellers compete for a finite number of homogeneous buyers, by posting prices. This "directed search" model is known to admit symmetric equilibria; yet, uniqueness has proved elusive. This study makes two contributions: a substantive contribution is to establish uniqueness of symmetric equilibrium; a methodological contribution is to develop a tool based on directional derivatives to characterize equilibrium.

Keywords: Nash equilibrium, matching, price distribution, search

JEL Classification: C70, D390, D490, E390

Suggested Citation

Kim, Jaehong and Camera, Gabriele, Uniqueness of Equilibrium in Directed Search Models (November 24, 2013). Available at SSRN: https://ssrn.com/abstract=2541966 or http://dx.doi.org/10.2139/ssrn.2541966

Jaehong Kim

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE) ( email )

A 307, Economics Building
Xiamen, Fujian 10246
China

Gabriele Camera (Contact Author)

Chapman University - Economic Science Institute ( email )

Orange, CA 92866
United States

HOME PAGE: http://www1.chapman.edu/~camera/

University of Bologna - Dept. of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

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