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“Multiplicity of Equilibria in Search Markets with Free Entry and Exit”

30-11-2004
Pedro Pereira

“Multiplicity of Equilibria in Search Markets with Free Entry and Exit”

Resumo WP nº 3:
In this paper I identify an instance of multiplicity of equilibria, in search markets with production cost heterogeneity. I show that if firms may enter or exit the market, there may be multiple equilibria. I provide a monotonicity property, which is necessary and sufficient for uniqueness. Multiplicity vanishes as the search cost gets small. Multiple equilibria can be ranked by welfare.