Abstract
Rubinstein and Wolinsky [Rev. Econ. Stud. 57 (1990) 63] show that a simple homogeneous market with exogenous matching has a continuum of (non-competitive) perfect equilibria; however, the unique Markov-perfect equilibrium of this model is competitive. By contrast, in the more general case of heterogeneous markets, even the Markov property is not enough to guarantee the perfectly competitive outcome. We define a market game that allows for heterogeneous values on both sides of the market and exhibit a number of examples of (non-competitive) Markov-perfect equilibria, with and without discounting. Unlike the homogeneous case, these equilibria allow for inefficient trades and for trade at non-uniform prices. The non-competitive equilibrium may be unique.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 336-352 |
| Number of pages | 17 |
| Journal | Games and Economic Behavior |
| Volume | 54 |
| Issue number | 2 |
| DOIs | |
| State | Published - Feb 2006 |
Fingerprint
Keywords
- Bargaining
- Competition
- Markov-perfect equilibrium
- Random matching
ASJC Scopus subject areas
- Economics and Econometrics
- Finance
Cite this
Markov equilibria in dynamic matching and bargaining games. / Gale, Douglas; Sabourian, Hamid.
In: Games and Economic Behavior, Vol. 54, No. 2, 02.2006, p. 336-352.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Markov equilibria in dynamic matching and bargaining games
AU - Gale, Douglas
AU - Sabourian, Hamid
PY - 2006/2
Y1 - 2006/2
N2 - Rubinstein and Wolinsky [Rev. Econ. Stud. 57 (1990) 63] show that a simple homogeneous market with exogenous matching has a continuum of (non-competitive) perfect equilibria; however, the unique Markov-perfect equilibrium of this model is competitive. By contrast, in the more general case of heterogeneous markets, even the Markov property is not enough to guarantee the perfectly competitive outcome. We define a market game that allows for heterogeneous values on both sides of the market and exhibit a number of examples of (non-competitive) Markov-perfect equilibria, with and without discounting. Unlike the homogeneous case, these equilibria allow for inefficient trades and for trade at non-uniform prices. The non-competitive equilibrium may be unique.
AB - Rubinstein and Wolinsky [Rev. Econ. Stud. 57 (1990) 63] show that a simple homogeneous market with exogenous matching has a continuum of (non-competitive) perfect equilibria; however, the unique Markov-perfect equilibrium of this model is competitive. By contrast, in the more general case of heterogeneous markets, even the Markov property is not enough to guarantee the perfectly competitive outcome. We define a market game that allows for heterogeneous values on both sides of the market and exhibit a number of examples of (non-competitive) Markov-perfect equilibria, with and without discounting. Unlike the homogeneous case, these equilibria allow for inefficient trades and for trade at non-uniform prices. The non-competitive equilibrium may be unique.
KW - Bargaining
KW - Competition
KW - Markov-perfect equilibrium
KW - Random matching
UR - http://www.scopus.com/inward/record.url?scp=31844437555&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=31844437555&partnerID=8YFLogxK
U2 - 10.1016/j.geb.2004.11.004
DO - 10.1016/j.geb.2004.11.004
M3 - Article
AN - SCOPUS:31844437555
VL - 54
SP - 336
EP - 352
JO - Games and Economic Behavior
JF - Games and Economic Behavior
SN - 0899-8256
IS - 2
ER -