The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Search Theory

  • P. Diamond
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_1535

Abstract

Search theory analyses resource allocation with imperfect technologies for informing agents of trading opportunities and for bringing together potential traders. This article examines some search theory analyses using a variety of special allocation mechanisms together with very simple preferences and production technologies. It explores models where information is gathered from visiting stores, and then looks at the changes that come from additional devices for information spread. It examines price setting both on a take-it-or-leave-it basis and resulting from idealized negotiations. While the presentation is in terms of a retail market, a similar approach has been useful in labour economics.

Keywords

Advertising Bargaining Competitive equilibrium Equilibrium Job search Law of one price Poisson distribution law Price reputation Reservation price Search costs Search theory Walrasian analysis 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • P. Diamond
    • 1
  1. 1.