Meeting technologies and optimal trading mechanisms in competitive search markets

Lester, Benjamin; Visschers, Ludo; Wolthoff, Ronald

Working Paper

Meeting technologies and optimal trading mechanisms in competitive search markets

Abstract: In a market in which sellers compete by posting mechanisms, we allow for a general meeting technology and show that its properties crucially affect the mechanism that sellers select in equilibrium. In general, it is optimal for sellers to post an auction without a reserve price but with a fee, paid by all buyers who meet with the seller. However, we define a novel condition on meeting technologies, which we call invariance, and show that meeting fees are equal to zero if and only if this condition is satisfied. Finally, we discuss how invariance is related to other properties of meeting technologies identified in the literature.

Keywords: Search frictions; Matching function; Meeting technology; Competing mechanisms; ;

JEL Classification: C78; D44; D83;