Buying Locally

George Mailath, Andrew Postlewaite and Larry Samuelson

ANU Working Papers in Economics and Econometrics from Australian National University, College of Business and Economics, School of Economics

Abstract: “Buy local” arrangements encourage members of a community or group to patronize one another rather than the external economy. They range from formal mechanisms such as local currencies to informal “I’ll buy from you if you buy from me” arrangements, and are often championed on social or environmental grounds. We show that in a monopolistically competitive economy, buy local arrangements can have salutary effects even for selfish agents immune to social or environmental considerations. Buy local arrangements effectively allow firms to exploit the equilibrium price-cost gap to profitably expand their sales at the going price.

Keywords: Buy local; local currency; trading favors; reciprocity; monopolistic competition (search for similar items in EconPapers)
JEL-codes: D43 D85 L14 R12 (search for similar items in EconPapers)
Date: 2015-03
New Economics Papers: this item is included in nep-mic and nep-ure
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https://www.cbe.anu.edu.au/researchpapers/econ/wp624.pdf (application/pdf)

Related works:
Journal Article: BUYING LOCALLY (2016)
Working Paper: Buying Locally (2015)
Working Paper: Buying Locally (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:acb:cbeeco:2015-624

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