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Anonymous Markets and Monetary Trading

Author

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  • Aliprantis, C.D.
  • Camera, Gabriele
  • Puzzello, D.

Abstract

We study an infinite-horizon economy with two basic frictions that are typical in monetary models. First, agents trading paths cross at most once due to pairwise trade and other meeting obstacles. Second, actions must be compatible with individual incentives due to commitment and enforcement limitations. We find that, with patient agents, relaxing the first friction by introducing centralized markets, opens the door to an informal enforcement scheme sustaining a non-monetary efficient allocation. Hence, we present a matching environment in which agents repeatedly access large markets and yet the basic frictions are retained. This allows the construction of models based on competitive markets in which money plays an essential role.

Suggested Citation

  • Aliprantis, C.D. & Camera, Gabriele & Puzzello, D., 2005. "Anonymous Markets and Monetary Trading," Purdue University Economics Working Papers 1179, Purdue University, Department of Economics.
    • Handle: RePEc:pur:prukra:1179
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    References listed on IDEAS

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    More about this item

    Keywords

    Money ; Infinite games ; Matching models ; Social norms;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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