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Turnover externalities with marketplace trading

Coles, MG (1999) 'Turnover externalities with marketplace trading.' International Economic Review, 40 (4). 851 - 868. ISSN 0020-6598

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Abstract

This article considers equilibrium decentralized trade when there is a marketplace where buyers and sellers meet costlessly. Since buyers have idiosyncratic match payoffs for each seller's good, some buyers, rather than trade with the current stock of sellers, wait for new sellers to enter the marketplace to obtain a good they like. A turnover externality exists where all traders are better off with higher entry rates of new traders. Furthermore, this turnover externality supports multiple Pareto-rankable equilibria. This provides new insights into similar results obtained in the random-matching literature.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 04 Jan 2013 13:36
Last Modified: 04 Feb 2019 11:15
URI: http://repository.essex.ac.uk/id/eprint/4905

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