Should Buyers or Sellers Organize Trade in a Frictional Market

Content Provider	Semantic Scholar
Author	Shi, Shouyong Delacroix, Alain
Copyright Year	2018
Abstract	To answer the question in the title, this article characterizes the socially efficient organization of the market with search frictions. The efficient organization depends on the relative elasticity in the supply between the two sides of the market, the costs of participating in the market and organizing trade, and the (a)symmetry in matching. We also show that the social optimum can be implemented by a realistic market equilibrium where the organizers set up trading sites to direct the other side’s search. The results provide a unified explanation for why trade has often been organized by sellers in the goods market, by buyers (firms) in the labor market, and by both sides in the asset market. The analysis also sheds light on how the efficient market organization can change with innovations such as e-commerce and just-in-time production.
Starting Page	2171
Ending Page	2214
Page Count	44
File Format	PDF HTM / HTML
DOI	10.2139/ssrn.2732751
Volume Number	133
Alternate Webpage(s)	https://economics.harvard.edu/files/economics/files/ms-26423.pdf
Alternate Webpage(s)	https://doi.org/10.2139/ssrn.2732751
Language	English
Access Restriction	Open
Content Type	Text
Resource Type	Article