Liquidity and the Market for Ideas

Rafael Silveira () and Randall Wright ()
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Rafael Silveira: Economics University of Pennsylvania

No 77, 2006 Meeting Papers from Society for Economic Dynamics

Abstract: 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

Keywords: entrepreneurship; liquidity; random matching; monetary policy (search for similar items in EconPapers)
JEL-codes: E40 M13 O31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent and nep-mac
Date: 2006-12-03
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Persistent link: http://EconPapers.repec.org/RePEc:red:sed006:77

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