Friction and the Multiplicity of Equilibria

Larry Karp

Institute for Research on Labor and Employment, Working Paper Series from Institute of Industrial Relations, UC Berkeley

Abstract: In familiar models, a decrease in the friction facing mobile factors (e.g., lowering their adjustment costs) increases a coordination problem, leading to more circumstances where there are multiple equilibria. We show that a decrease in friction can decrease coordination problems if, for example, a production externality arises from a changing stock of knowledge or a changing environmental stock. In general, the relation between the amount of friction that mobile factors face and the likelihood of multiple equilibria is non-monotonic.

Keywords: Indeterminacy; Multiple equilibria; Coordination games (search for similar items in EconPapers)
Date: 2005-02-08
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.escholarship.org/uc/item/0n1563b5.pdf;origin=repeccitec (application/pdf)

Related works:
Working Paper: Friction and the Multiplicity of Equilibria (2005)
Working Paper: Friction and the Multiplicity of Equilibria (2005)
Working Paper: Friction and the Multiplicity of Equilibria (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cdl:indrel:qt0n1563b5

Access Statistics for this paper

More papers in Institute for Research on Labor and Employment, Working Paper Series from Institute of Industrial Relations, UC Berkeley Contact information at EDIRC.
Bibliographic data for series maintained by Lisa Schiff ().