Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/150200
Authors: 
Mailath, George J.
Samuelson, Larry
Postlewaite, Andrew
Year of Publication: 
2013
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 8 [Year:] 2013 [Issue:] 2 [Pages:] 535-590
Abstract: 
Different markets are cleared by different types of prices—seller-specific prices that are uniform across buyers in some markets, and personalized prices tailored to the buyer in others. We examine a setting in which buyers and sellers make investments before matching in a competitive market. We introduce the notion of premuneration values—the values to the transacting agents prior to any transfers— created by a buyer-seller match. Personalized price equilibrium outcomes are independent of premuneration values and exhibit inefficiencies only in the event of “coordination failures,” while uniform-price equilibria depend on premuneration values and in general feature inefficient investments even without coordination failures. There is thus a trade-off between the costs of personalizing prices and the inefficient investments under uniform prices. We characterize the premuneration values under which uniform-price equilibria similarly exhibit inefficiencies only in the event of coordination failures.
Subjects: 
Directed search
matching
premuneration value
prematch investments
search
JEL: 
C78
D40
D41
D50
D83
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Article

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