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Markets and Relationships in a Learning Economy

Author

Listed:
  • Luis Araujo

    (Michigan State University)

  • Raoul Minetti

    (Michigan State University)

Abstract

It is generally agreed that within long-term relationships agents learn the characteristics of their market partners better than through spot transactions. In contrast, little is known on how relationship-based and transaction-based markets compare when agents learn about the aggregate economy from market exchanges. In this paper, we study the market structure that arises in an economy where agents learn the aggregate productivity from market exchanges. The model allows to relate the market structure to macroeconomic fundamentals such as the persistence and volatility of the aggregate productivity and the cross-sectional volatility of productivity. (Copyright: Elsevier)

Suggested Citation

  • Luis Araujo & Raoul Minetti, 2010. "Markets and Relationships in a Learning Economy," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(3), pages 687-700, July.
  • Handle: RePEc:red:issued:08-136
    DOI: 10.1016/j.red.2009.09.001
    as

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    File URL: http://dx.doi.org/10.1016/j.red.2009.09.001
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    References listed on IDEAS

    as
    1. Amador, Manuel & Weill, Pierre-Olivier, 2006. "Learning from Private and Public Observation of Other's Actions," MPRA Paper 109, University Library of Munich, Germany.
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    More about this item

    Keywords

    Learning; Aggregate productivity; Long-term relationships;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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