Coalition-Proof Trade and the Friedman Rule in the Lagos-Wright Model
The Lagos-Wright model-a monetary model in which pairwise meetings alternate in time with a centralized meeting-has been extensively analyzed, but always using particular trading protocols. Here, trading protocols are replaced by two alternative notions of implementability: one that allows only individual defections and one that also allows cooperative defections in meetings. It is shown that the first-best allocation is implementable under the stricter notion without taxation if people are sufficiently patient. And, if people are free to skip the centralized meeting, then lump-sum taxation used to pay interest on money does not enlarge the set of implementable allocations. (c) 2009 by The University of Chicago. All rights reserved.
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Volume (Year): 117 (2009)
Issue (Month): 1 (02)
Pages: 116-137
| Handle: | RePEc:ucp:jpolec:v:117:y:2009:i:1:p:116-137 |
| Contact details of provider: | Web page: http://www.journals.uchicago.edu/JPE/
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References listed on IDEAS
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