Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/298022 
Year of Publication: 
2024
Series/Report no.: 
Tinbergen Institute Discussion Paper No. TI 2024-015/VIII
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
This paper considers a random search model where some locations provide sellers with better chances of meeting many buyers than other locations (for example popular shopping streets or the first page of a search engine). When sellers are heterogeneous in terms of the quality of their product and/or the probability that a given buyer likes their product, it is desirable that sellers of high-quality niche products sort into the best locations. We show that this does not always happen in a decentralized market. Finally, we allow for endogenous location distributions and show that more trades are realized when locations are similar (in which case the aggregate matching function is urn-ball) but that quality weighted trade can be higher when locations are heterogeneous.
Subjects: 
search frictions
spatial equilibrium
sorting
JEL: 
C78
D44
D83
Document Type: 
Working Paper

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