The Library
Ex-ante price commitment with renegotiation in a dynamic market
Tools
Masters, Adrian and Muthoo, Abhinay (2012) Ex-ante price commitment with renegotiation in a dynamic market. Working Paper. Coventry: Economics Department, University of Warwick. Warwick economics research paper series (TWERPS), Vol.2012 (No.1000).
|
Text
twerp_1000.pdf - Draft Version Download (158Kb) | Preview |
Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
This paper studies a dynamic model of a market such as a labour market in which firms post wages and search for workers but trade may occur at a negotiated wage procedure in markets characterized by match-specific heterogeneity. We study a model of a market in which, in each time period, agents on one side (e.g., sellers) choose whether or not to post a price before they encounter agents of the opposite type. After a pair of agents have encountered each other, their match-specific
values from trading with each other are realized. If a price was not posted, then the terms of trade (and whether or not it occurs) are determined by bargaining. Otherwise, depending upon the agents’ match-specific trading values, trade occurs (if it does) either on the posted price or at a renegotiated price. We analyze the symmetric Markov subgame perfect equilibria of this market game, and address a variety of issues such as the impact of market frictions on the equilibrium proportion of trades that occur at a posted price rather than at a negotiated price.
Item Type: | Working or Discussion Paper (Working Paper) | ||||
---|---|---|---|---|---|
Subjects: | H Social Sciences > HF Commerce | ||||
Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | Markets -- Econometric models | ||||
Series Name: | Warwick economics research paper series (TWERPS) | ||||
Publisher: | Economics Department, University of Warwick | ||||
Place of Publication: | Coventry | ||||
Official Date: | 5 November 2012 | ||||
Dates: |
|
||||
Volume: | Vol.2012 | ||||
Number: | No.1000 | ||||
Number of Pages: | 24 | ||||
Institution: | University of Warwick | ||||
Status: | Not Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Open Access (Creative Commons) |
Request changes or add full text files to a record
Repository staff actions (login required)
View Item |
Downloads
Downloads per month over past year