COMPETITIVE-SEARCH EQUILIBRIUM IN MONETARY ECONOMIES

Miquel Faig () and Xiuhua Huangfu

Working Papers from University of Toronto, Department of Economics

Abstract: This is a comment on the work of Rocheteau and Wright (2005) who have recently introduced competitive search into monetary economics. We extend their work by eliminating the restriction that the fees market makers charge to enter a submarket must be either non-negative or identical for buyers and sellers. Without this restriction, buyers pay a positive fee to enter the submarket they visit and nothing else when they meet a seller. Sellers are remunerated by the market makers from the entry fees collected from the buyers. This trading arrangement allows buyers to perfectly predict their expenses, so the opportunity cost of holding idle money balances is eliminated.

Keywords: competitive search; monetary search. (search for similar items in EconPapers)
JEL-codes: E40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-mac and nep-mon
Date: Written 2006-03-31
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Related works:
Journal Article: Competitive-search equilibrium in monetary economies (2007)
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