Search in the product market and the real business cycle

Thomas Mathä and Olivier Pierrard

Journal of Economic Dynamics and Control, 2011, vol. 35, issue 8, 1172-1191

Abstract: Empirical evidence suggests that most firms operate in imperfectly competitive markets. We develop a search-matching model between wholesalers and retailers. Firms face search costs and form long-term relationships. Price bargain results in both wholesaler and retailer mark ups, which depend on firms' relative bargaining power. We simulate the general equilibrium model and explore the role of product market search frictions for business cycles. We conclude from the simulation exercise that incorporating product market search structure and shocks improve the standard real business cycle model to reproduce US business cycle fluctuations.

Keywords: Business; cycle; Frictions; Search; Product; market; Price; bargain (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Search in the product market and the real business cycle (2011)
Working Paper: Search in the Product Market and the Real Business Cycle (2009)
Working Paper: Search in the product market and the real business cycle (2009)
Working Paper: Search in the product market and the real business cycle (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:35:y:2011:i:8:p:1172-1191

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