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Directed Search and Competitive Search Equilibrium: A Guided Tour

Randall Wright¹; Philipp Kircher²; Benoı̂t Julien³; Veronica Guerrieri⁴

¹ Zhejiang University, University of Wisconsin–Madison, and Federal Reserve Bank Minneapolis. · ² European University Institute and University of Edinburgh · ³ University of New South Wales Business School · ⁴ University of Chicago Booth School of Business

This essay surveys the literature on directed search and competitive search equilibrium, covering theory and a variety of applications. These models share features with traditional search theory, but also differ in important ways. They share features with general equilibrium theory, but with explicit frictions. Equilibria are often efficient, mainly because markets price goods plus the time required to get them. The approach is tractable and arguably realistic. Results are presented for finite and continuum economies. Private information and sorting with heterogeneity are analyzed. While emphasizing issues and applications, we also provide several hard-to-find technical results. (JEL D50, D83)

DOI

10.1257/jel.20191505

Volume

59 (1)

Pages

90-148

Language

en

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