Strategic Advertising and Directed Search

Gomis‐Porqueras, Pedro; Julien, Benoı̂t; Wang, Chengsi

doi:10.2139/ssrn.2404269

SSRN Journal

2014

DOI: 10.2139/ssrn.2404269

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Strategic Advertising and Directed Search

Pedro Gomis‐Porqueras

Benoı̂t Julien

Chengsi Wang

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Cited by 2 publications

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“…This, buyer heterogeneity alone could explain the co-existence of the two markets. Introducing heterogeneity amongst buyers (or sellers) would only strengthen our conclusions as there is more scope for co-existence.25 We refer toGomis-Porqueras et al (2017) for the properties of equilibrium under price posting and auctions in environments where advertising is costly and its reach is probabilistic.26 In contrast toCamera and Selcuk (2009), here prices posted by sellers cannot be renegotiated depending on market conditions, so that there is no distinction between the posted list price and the sale price…”

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confidence: 96%

Evolutionary stability of bargaining and price posting: implications for formal and informal activities

2017

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In this paper we study the coexistence of two well known trading protocols, bargaining and price-posting. To do so we consider a frictional environment where buyers and sellers play price-posting and bargaining games infinitely many times. Sellers switch from one market to the other at a rate that is proportional to their payoff differentials. Given the different informational requirements associated with these two trading mechanisms, we examine their possible coexistence in the context of informal and formal markets. Other than having different trading protocols, we also consider other distinguishing features. We find a unique stable equilibrium where price-posting (formal markets) and bargaining (informal markets) co-exist. In a richer environment where both sellers and buyers can move across markets, we show that there exists a unique stable dynamic equilibrium where formal and informal activities also co-exist whenever sellers' and buyers' net costs of trading in the formal market have opposite signs.

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confidence: 96%

Evolutionary stability of bargaining and price posting: implications for formal and informal activities

2017

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“… See Camera and Selcuk () for a directed search model of the labour market, where ex post renegotiations are allowed, and more recent papers like Doyle and Wong () and Gomis‐Porqueras et al. (), where they do away with the commitment assumption. …”

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Wage–vacancy contracts and multiplicity of equilibria in a directed search model of the labour market

Jacquet

Kennes

Tan

2019

Canadian J of Economics

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This paper studies a directed search model of the labour market, which is standard in all aspects except two. First, we allow firms to post wage–vacancy contracts advertising the number of workers they would pay as well as the payment all will receive. Second, we consider two cases: one where workers are risk neutral and one where workers are risk averse, both in finite and large economies. Our paper shows that when firms post wage–vacancy contracts, whether workers are modelled as risk neutral or risk averse matters: the types of symmetric equilibria and the nature of multiplicity of equilibria are different. Somewhat surprisingly, when there are finite numbers of risk‐neutral workers and firms, we obtain a finite number of symmetric equilibria, but when workers are risk averse, we obtain a continuum of equilibria. Furthermore, our paper sounds a cautionary note on using large economies as an approximation of finite economies: when workers are risk neutral, the nature of equilibrium is preserved going from a finite to a large economy, but the nature of equilibrium is different when workers are risk averse.

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Strategic Advertising and Directed Search

Cited by 2 publications

References 34 publications

Evolutionary stability of bargaining and price posting: implications for formal and informal activities

Evolutionary stability of bargaining and price posting: implications for formal and informal activities

Wage–vacancy contracts and multiplicity of equilibria in a directed search model of the labour market

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