@article{8e6f25acf737443f9b705556bd51b123,
title = "SEARCH, ADVERSE SELECTION, AND MARKET CLEARING",
abstract = "We examine a dynamic decentralized trading model with infinitesimal sellers and buyers to investigate whether or not the market fails to clear in the limit of search friction vanishing. A seller, who has private information about product quality, and a buyer are matched to bargain over price. They form a long-term relationship if they reach agreement. They return to the matching pool if they fail to agree or the existing relationship is dissolved. The market fails to clear if and only if the ratio of agents' patience over the dissolution rate exceeds a threshold.",
author = "Cho, {In Koo} and Akihiko Matsui",
note = "Funding Information: 1We are grateful for helpful conversation with Asher Wolinsky, Briana Chang, and John Moore, and helpful comments by three anonymous referees and the editor. Financial support from the National Science Foundation, the Japan Society for the Promotion of Science, and Korea Research Foundation (2015S1A5A2A01011999) is gratefully acknowledged. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the National Science Foundation, Korea Research Foundation, Federal Reserve Bank, or the Japan Society for the Promotion of Science. Please address correspondence to: Aki-hiko Matsui, Faculty of Economics, University of Tokyo, 7-3-1 Hongo Bunkyo-ku Tokyo, 113-0033, Japan. E-mail: amatsui@e.u-tokyo.ac.jp. Publisher Copyright: {\textcopyright} (2018) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association",
year = "2018",
month = aug,
doi = "10.1111/iere.12309",
language = "English (US)",
volume = "59",
pages = "1437--1467",
journal = "International Economic Review",
issn = "0020-6598",
publisher = "Wiley-Blackwell",
number = "3",
}