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Anonymous Markets and Monetary Trading

C.D. Aliprantis, Gabriele Camera () and Daniela Puzzello ()

Purdue University Economics Working Papers from Purdue University, Department of Economics

Abstract: We study an infinite-horizon economy with two basic frictions that are typical in monetary models. First, agents’ trading paths cross at most once due to pairwise trade and other meeting obstacles. Second, actions must be compatible with individual incentives due to commitment and enforcement limitations. We find that, with patient agents, relaxing the first friction by introducing centralized markets, opens the door to an informal enforcement scheme sustaining a non-monetary efficient allocation. Hence, we present a matching environment in which agents repeatedly access large markets and yet the basic frictions are retained. This allows the construction of models based on competitive markets in which money plays an essential role.

Keywords: Money; Infinite games; Matching models; Social norms (search for similar items in EconPapers)
JEL-codes: C72 C73 D80 E00 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2005-10
New Economics Papers: this item is included in nep-cba, nep-dge, nep-fmk, nep-mac and nep-mon
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Journal Article: Anonymous markets and monetary trading (2007) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pur:prukra:1179

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