Synchronising Markets, Mutual Information and the Price Level: Co-ordination in a Non-General Equilibrium World

Arthur DeVany

Chapter 13 in Inflation, Institutions and Information, 1996, pp 321-336 from Palgrave Macmillan

Abstract: Abstract In his paper ‘Information costs and the division of labor’, Axel Leijonhufvud (1989) describes a system of production in which firms show increasing returns and every firm uses inputs that are produced by other firms in the system. Such a system of interrelated firms will show increasing returns if they overcome the co-ordination failures to which the system is subject. Co-ordination failures are failures of timing and synchronisation: when a critical input is not supplied on time this affects the production and delivery of other products throughout the system. They are brought on when specialised assets become the subject of opportunistic hold-ups, and this problem is also a failure of timing and market illiquidity.

Keywords: Mutual Information; General Equilibrium; Reserve Price; Future Market; Output Market (search for similar items in EconPapers)
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-13521-9_13

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DOI: 10.1007/978-1-349-13521-9_13

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