Credit, Money and Asset Equilibria with Indivisible Goods

Han Han, Benoit Julien, Asgerdur Petursdottir and Liang Wang
Additional contact information
Han Han: School of Economics Peking University
Asgerdur Petursdottir: University of Bath

No 201608, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: We study the trade of indivisible goods using credit, divisible money and divisible assets in a frictional market. We show how indivisibility matters for equilibria. Bargaining generates a price that is not linked to nominal interest rates, dividend value of the asset, or the number of active buyers. To reestablish this connection, we consider price posting with competitive search. We provide conditions under which stationary equilibrium exists. With bargaining, we find that for negative dividend value on the asset, multiple equilibria occur. Otherwise, in all possible combinations of liquidity and price mechanisms the equilibrium is unique or generically unique.

Keywords: Nash Bargaining; Competitive Search; Indivisibility; Multiplicity; Uniqueness (search for similar items in EconPapers)
JEL-codes: D51 E40 (search for similar items in EconPapers)
Date: 2016-06
New Economics Papers: this item is included in nep-dge, nep-mac and nep-mon
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Citations: View citations in EconPapers (6)

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http://www.economics.hawaii.edu/research/workingpapers/WP_16-08R.pdf First version, 2016 (application/pdf)

Related works:
Working Paper: Credit, Money and Asset Equilibria with Indivisible Goods (2016)
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