Markets and Relationships in a Learning Economy

Luis Araujo () and Raoul Minetti

Review of Economic Dynamics, 2010, vol. 13, issue 3, pages 687-700

Abstract: It is generally agreed that within long-term relationships agents learn the characteristics of their market partners better than through spot transactions. In contrast, little is known on how relationship-based and transaction-based markets compare when agents learn about the aggregate economy from market exchanges. In this paper, we study the market structure that arises in an economy where agents learn the aggregate productivity from market exchanges. The model allows to relate the market structure to macroeconomic fundamentals such as the persistence and volatility of the aggregate productivity and the cross-sectional volatility of productivity. (Copyright: Elsevier)

Keywords: Learning; Aggregate productivity; Long-term relationships (search for similar items in EconPapers)
JEL-codes: D83 E00 (search for similar items in EconPapers)
Date: 2010
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