Discussion paper

DP12542 Meetings and Mechanisms

We analyze a market in which sellers compete for heterogeneous buyers by posting
mechanisms. A general meeting technology governs how buyers and sellers meet. We
introduce a one-to-one transformation of this meeting technology that helps to clarify
and extend many of the existing results in the literature, which has focused on two
special cases: urn-ball and bilateral meetings. We show that the optimal mechanism
for sellers is to post auctions combined with a reserve price equal to their own valuation
and an appropriate fee (or subsidy) which is paid by (or to) all buyers meeting the
seller. Even when there are externalities in the meeting process, the equilibrium is efficient.
Finally, we analyze the sorting patterns between heterogeneous buyers and sellers
and show under which conditions high-value sellers attract more high-value buyers in


Gautier, P, X Cai and R Wolthoff (2017), ‘DP12542 Meetings and Mechanisms‘, CEPR Discussion Paper No. 12542. CEPR Press, Paris & London. https://cepr.org/publications/dp12542