Matching, Search, and Intermediation with Two-Sided Heterogeneity
نویسندگان
چکیده
This paper analyzes the role played by intermediation in a decentralized market, where trade is carried out through bilateral bargaining, and where the bargaining outcomes depend on the process of search for suitable trading partners. To this purpose, ...rst a model of random matching and twosided search with heterogeneous agents is developed. The characterization of pure search equilibria is provided, and it is shown that sorting externalities might cause ine¢ciencies to arise. Secondly, the incentive for intermediation to emerge endogenously in this environment is considered. Intermediation might induce separation of the agents’ types, thus serving as an e¢ciency-enhancing mechanism. Journal of Economic Literature Classi...cation Numbers: C78, D43, L11.
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