Directed Multilateral Matching in a Monetary Economy
AbstractWe consider a monetary economy with directed multilateral matching between buyers and sellers. A buyer chooses how much money to hold, observes the location of all sellers, and decides which seller to visit. The number of buyers that arrive at a particular seller is random due to lack of coordination. Every seller has a single indivisible good and all buyers have the same valuation for the good, though they may hold different amounts of money. The good is allocated according to a second price auction where buyers bid with their money rather than valuations. We show that in equilibrium ex ante identical buyers choose different money holdings: carrying more money is costly but it increases the probability of winning the auction. The unique equilibrium distribution of money holdings is analytically characterized. The entry of sellers is efficient at the Friedman rule but is suboptimal for higher inflation rates
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2006 Meeting Papers with number 708.
Date of creation: 03 Dec 2006
Date of revision:
Contact details of provider:
Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Web page: http://www.EconomicDynamics.org/society.htm
More information through EDIRC
Money Search; Auctions;
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Richard Dutu & Benoit Julien & Ian King, 2009. "Liquidity Constrained Competing Auctions," Department of Economics - Working Papers Series 1068, The University of Melbourne.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann).
If references are entirely missing, you can add them using this form.