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Search, Matching, and Self-Organization of a Marketplace

Discussion Papers

No.396

by Ke Ding, Toshitaka Gokan, Xiwei Zhu
March 2013

ABSTRACT

In many developing countries, clusters of small shops are the typical market-place. We investigate an economic model in which, between buyers and sellers in a marketplace, a circular causality including the search process produces agglomeration forces, given the initial location of the marketplace location exogenously in a linear city. We conclude that initial number of buyers and sellers is important in forming a large marketplace.



Keywords: circular causality; market place
JEL classification: D04, R12
Preliminary and incomplete. Please do not cite without authors’permission.

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