Name
Abstract | ||
|---|---|---|
We study price posting with undirected search in a search-theoretic monetary model with divisible money and divisible goods. Ex ante homogeneous buyers experience match-specific preference shocks in bilateral trades. The shocks follow a continuous uniform distribution, and the realizations of the shocks are private information. We show that there exists a unique monetary equilibrium for generic values of the inflation rate. In equilibrium, each seller posts a continuous pricing schedule that exhibits quantity discounts. Buyers may spend nothing, a fraction or all of their money holdings, depending on their preference-shock realizations. Inflation reduces the extent of non-linear pricing. The model captures the hot-potato effect of inflation along both the extensive margin, as an increase in the trading probability, and the intensive margin, as higher fractions of money being spent. |
Year | DOI | Venue |
|---|---|---|
2014 | 10.1016/j.jet.2013.12.005 | Journal of Economic Theory |
Keywords | DocType | Volume |
D82,D83,E31 | Journal | 150 |
ISSN | Citations | PageRank |
0022-0531 | 0 | 0.34 |
References | Authors | |
1 | 2 | |
Name | Order | Citations | PageRank |
|---|---|---|---|
| Mei Dong | 1 | 0 | 0.34 |
| Janet Hua Jiang | 2 | 0 | 0.34 |