Endogenous budget constraints

Patrick Hummel

Mathematical Social Sciences, 2017, vol. 88, issue C, 11-15

Abstract: This paper considers a model in which a single buyer seeks to buy a continuum of objects from a continuum of sellers. The sellers specify prices at which they are willing to sell their objects to the buyer, and the buyer then decides which objects to purchase. I illustrate that the buyer has an incentive to commit to a binding budget constraint before seeking offers from the sellers.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:88:y:2017:i:c:p:11-15

DOI: 10.1016/j.mathsocsci.2017.04.001

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