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Liquidity and the Market for Ideas


  • Rafael Silveira

    () (Economics University of Pennsylvania)

  • Randall Wright


We study markets where innovators can sell ideas to entrepreneurs, who may be better at implementing them. These markets are decentralized, with random matching and bargaining. Entrepreneurs hold liquid assets lest potentially profitable opportunities may be lost. We extend existing models of the demand for liquidity along several dimensions, including allowing agents to put deals on hold while they try to raise funds. We determine which ideas get traded in equilibrium, compare this to the efficient outcome, and discuss policy implications. We also discuss several special aspects of ideas, as opposed to generic consumption goods: e.g. they are intermediate inputs; they are indivisible; and they are at least partially public (nonrivalous) goods

Suggested Citation

  • Rafael Silveira & Randall Wright, 2006. "Liquidity and the Market for Ideas," 2006 Meeting Papers 77, Society for Economic Dynamics.
  • Handle: RePEc:red:sed006:77

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    entrepreneurship; liquidity; random matching; monetary policy;

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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