Bargaining Foundations for Price Taking in Matching Markets
Year: 2025
Type: article
Abstract: ABSTRACT Agents make noncontractible investments before bargaining over who matches with whom and their terms of trade. An agent is a price taker when her investments do not change her potential partners' payoffs. This incentivizes socially optimal investments. Across a variety of noncooperative bargaining models featuring dynamic entry, we show that everyone necessarily becomes a price taker as the discount factor goes to 1 if there is a minimal amount of competition always present in the market. If this condition is not satisfied, dynamic entry need not create enough competition to guarantee price taking even if agents are arbitrarily patient.
Source: Apollo (University of Cambridge)
DOI: 10.17863/cam.116451
Authors: Elliott, Matthew, Talamàs, Eduard
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W6887904876
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