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Minimum prices in a model with search frictions and price posting

Xiaoming Cai

Economics Letters, 2015, vol. 135, issue C, 61-64

Abstract: In this paper I consider the effects of a minimum price (maximum wage) in a random search model with price (wage) posting. I show that with a minimum price, the price distribution will have a mass point. If the minimum price is sufficiently high, the price distribution will become degenerate.

Keywords: Minimum price; Maximum wage; Price dispersion; Mass point (search for similar items in EconPapers)
JEL-codes: D4 J3 L1 L5 (search for similar items in EconPapers)
Date: 2015
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Handle: RePEc:eee:ecolet:v:135:y:2015:i:c:p:61-64