6 results for Julien, Benoit

  • Auction Beats Posted Prices in a Small Market

    Julien, Benoit; Kennes, John; King, Ian (2002)

    Working or discussion paper
    The University of Auckland Library

    In a model with two buyers and sellers we consider the choice of sales mechanism from three possibilities: posted prices, and auctions with and without reserve prices. With homogenous goods, sellers expected revenues are highest when both sellers auction with reserve prices 33% higher than if posting prices and 100% higher than if auctioning without reserve prices. When sellers can choose their mechanism before choosing prices, both sellers auction with a reserve price in the dominant strategy equilibrium. With heterogenous goods, the equilibrium with posted prices is inefficient (Montgomery (1991)) but the equilibria with both types of auctions are efficient.

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  • Auctions and Posted Prices in Directed Search Equilibrium

    Julien, Benoit; Kennes, John; King, Ian (2001)

    Journal article
    The University of Auckland Library

    An open access copy of this article is available and complies with the copyright holder/publisher conditions. We compare equilibrium allocations in directed search models where prices are determined alternatively by posting and by competing auctions, with the following results. With finite numbers of players, sellers’ expected payoffs are higher when all sellers auction than when all sellers post. This difference is largest in the 2-by-2 case, where payoffs to sellers are 1/3 higher if they auction. The difference in the payoffs decreases rapidly with market size and vanishes in the limit “large” economy. When sellers can choose whether to post prices or auction in the 2-by-2- case, all combinations (auction-auction, post-post, and auction-post) can occur in equilibrium if sellers choose mechanism and price simultaneously. However, if sellers choose mechanism before price then the dominant strategy equilibrium has both sellers auctioning.

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  • Directed Search without Price Directions

    Julien, Benoit; Kennes, John; King, Ian (2003)

    Working or discussion paper
    The University of Auckland Library

    This paper presents a very simple directed search model of the labour market in which no wage announcements are made. Wages, instead, are determined by an ex post bidding mechanism: an auction without a reserve price. We characterize the properties of the equilibrium of the model, and examine its implied Beveridge curve. We show that this wage determination mechanism induces efficient job entry in equilibrium. A dynamic version of the model is calibrated to the US labour market. The model can account for observed vacancy rates, given parameters that are chosen to match the average wages and the natural rate of unemployment. In the limit, as the time between offer rounds in the model approaches zero, the equilibrium approaches the Walrasian competitive equilibrium.

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  • Matching Foundations

    Julien, Benoit; Kennes, John; King, Ian (2000)

    Working or discussion paper
    The University of Auckland Library

    We compare equilibrium allocations in directed search models where prices are determined alternatively by posting and by competing auctions. Sellers' expected payoffs are higher when all sellers auction, but the difference in the payoffs decreases rapidly with market size and vanishes in the limit "large" economy. In this large economy, buyer and seller payoffs are different, but entry of both buyers and sellers is constrainedefficient. When sellers can choose whether to post prices or auction in the 2-buyer 2- seller case, then the equilibrium choice depends on whether or not sellers can commit. If both sellers can commit, then the dominant strategy equilibrium has both sellers auctioning. If neither seller can commit, then all possible combinations are equilibria.

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  • Residual Wage Disparity in Directed Search Equilibrium

    King, Ian; Kennes, John; Julien, Benoit (2001)

    Working or discussion paper
    The University of Auckland Library

    We examine how much of the observed wage dispersion among similar workers can be explained as a consequence of a lack of coordination among employers. To do this, we construct a directed search model with homogenous workers but where firms can create either good or bad jobs, aimed at either employed or unemployed workers. Workers in our model can also sell their labor to the highest bidder. The stationary equilibrium has both technology dispersion ' different wages due to different job qualities, and contract dispersion ' different wages due to different market experiences for workers. The equilibrium is also constrained-efficient ' in stark contrast to undirected search models with technology dispersion. We then calibrate the model to the US economy and show that the implied dispersion measures are quite close to those in the data.

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  • The Mortensen Rule and Efficient Coordination Unemployment

    Julien, Benoit; Kennes, John; King, Ian (2002)

    Working or discussion paper
    The University of Auckland Library

    We study the implementation of constrained-efficient allocations in labour markets where a basic coordination problem leads to an equilibrium matching function. We argue that these allocations can be achieved in equilibrium if wages are determined by ex post bidding. This holds true even in finite sized markets where the equilibrium matching function has decreasing returns to scale where the Hosios rule does not apply to both with and without heterogeneity. This wage determination mechanism is similar to the one proposed by Mortensen (1982) in a different setting.

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