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A simple search model of money with heterogeneous agents and partial acceptability

Andrei Shevchenko and Randall Wright ()

Economic Theory, 2004, vol. 24, issue 4, 877-885

Abstract: Simple search models have equilibria where some agents accept money and others do not. We argue such equilibria should not be taken seriously. This is unfortunate if one wants a model with partial acceptability. We introduce heterogeneous agents and show partial acceptability arises naturally and robustly. There can be multiple equilibria with different degrees of acceptability. Given the type of heterogeneity we allow, the model is simple: equilibria reduce to fixed points in [0,1]. We show that with other forms of heterogeneity equilibria are fixed points in set space, and there is no method to reduce this to a problem in R 1 . Copyright Springer-Verlag Berlin/Heidelberg 2004

Keywords: Money; Search; Acceptability. (search for similar items in EconPapers)
Date: 2004
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DOI: 10.1007/s00199-002-0334-3

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