@article{9d933051737845c5809f4d4394d3b44f,
title = "Prices, delay, and the dynamics of trade",
abstract = "We characterize the dynamics of trading patterns and market composition when trade is bilateral, finding a trading partner is costly, prices are determined by bargaining, and preferences are private information. We show that equilibrium is inefficient and exhibits delay as sellers price discriminate between buyers with different values. As frictions vanish, transaction prices are asymptotically competitive and the welfare loss of inefficient trading approaches zero, even though the trading patterns continue to be inefficient and delay persists. Journal of Economic Literature Classification Numbers: D40, D50.",
keywords = "Asymmetric information, Bargaining, Decentralized markets, Delay, Matching, Trade dynamics",
author = "Diego Moreno and John Wooders",
note = "Funding Information: 1We gratefully acknowledge financial support from the National Science Foundation, Grant SBR-9810481, and the Spanish Ministry of Education (DGES), Grant PB97-0091. We thank an associate editor and two referees for helpful suggestions. We benefited from comments by Eric Fisher, Roberto Serrano, Mark Walker, and the participants at seminars at Arizona State University, Boston University, California Institute of Technology, Cornell University, Institut d{\textquoteright}Estudis Catalans (Barcelona Jocs), Universidad de Alicante, Universitat Pompeu Fabra, University of Bonn, ISER at Osaka University, the University of Tsukuba, and the participants at the 1999 Decentralization Conference, the 1999 Southern California Theory Conference, and the 1999 Stanford Institute for Theoretical Economics (SITE) conference.",
year = "2002",
doi = "10.1006/jeth.2001.2822",
language = "English (US)",
volume = "104",
pages = "304--339",
journal = "Journal of Economic Theory",
issn = "0022-0531",
publisher = "Academic Press Inc.",
number = "2",
}