DP1048 Marketplaces and Matching

Author(s): Melvyn G Coles, Eric Smith
Publication Date: October 1994
Keyword(s): Marketplaces, Matching, Unemployment Hazards
JEL(s): J64
Programme Areas: Human Resources
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1048

This paper models equilibrium trading patterns when marketplaces exist and goods are differentiated. When first visiting the market, a buyer samples a stock of goods. If fortunate, the buyer matches with and purchases one of these goods and then exits the market. If an initial match does not exist, the buyer can now only match with the flow of new goods for sale. The previous stock has been sampled and rejected. In a steady state, the current stock of unmatched traders on one side of the market is trying to match with the flow of new traders on the other side. It is shown that this market behaviour describes matching patterns between unemployed job seekers and vacancies in UK Job Centres.