Sequentially Mixed Search and Equilibrium Price Dispersion

46 Pages Posted: 23 Nov 2018

See all articles by Shouyong Shi

Shouyong Shi

Pennsylvania State University

Date Written: October 8, 2018

Abstract

Many markets feature sequentially mixed search (SMS), which has directed search in the first stage followed by noisy matching with multiple offers in the second stage. I construct a simple model of SMS, establish existence of a unique equilibrium, analyze how the two stages of SMS interact to affect quantities and price dispersion, and conduct comparative statics with respect to the meeting efficiency and the economic condition. By extending the model to endogenize search effort, I show that the equilibrium is not constrained socially efficient. Policies are introduced to restore efficiency and to manage aggregate demand and supply.

Keywords: Sequentially mixed search, Price dispersion, Efficiency

JEL Classification: D40, D60, D83

Suggested Citation

Shi, Shouyong, Sequentially Mixed Search and Equilibrium Price Dispersion (October 8, 2018). Available at SSRN: https://ssrn.com/abstract=3262935 or http://dx.doi.org/10.2139/ssrn.3262935

Shouyong Shi (Contact Author)

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
62
rank
343,127
Abstract Views
220
PlumX Metrics