Option to wait in a search model

• Autores: Klaus Kultti, Juha Virrankoski
• Localización: Spanish economic review, ISSN 1435-5469, Vol. 6, Nº 2, 2004, págs. 153-158
• Idioma: inglés
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• Resumen

  • We consider a standard search model with buyers and sellers. Upon meeting the buyers make a take-it-or-leave-it offer, but the sellers have an option not to trade immediately but wait for more agents to appear. If more buyers come, there is excess demand, and the buyers engage in auction to get the good. Analogously, if more sellers come, the sellers engage in a Bertrand-type pricing game to sell the object. The option to wait restricts the price offer of the buyer; in an equilibrium in which trades are consummated without delay there is a unique price offer for the buyer.