Directed Multilateral Matching in a Monetary Economy

Manolis Galenianos and Philipp Kircher

No 708, 2006 Meeting Papers from Society for Economic Dynamics

Abstract: We consider a monetary economy with directed multilateral matching between buyers and sellers. A buyer chooses how much money to hold, observes the location of all sellers, and decides which seller to visit. The number of buyers that arrive at a particular seller is random due to lack of coordination. Every seller has a single indivisible good and all buyers have the same valuation for the good, though they may hold different amounts of money. The good is allocated according to a second price auction where buyers bid with their money rather than valuations. We show that in equilibrium ex ante identical buyers choose different money holdings: carrying more money is costly but it increases the probability of winning the auction. The unique equilibrium distribution of money holdings is analytically characterized. The entry of sellers is efficient at the Friedman rule but is suboptimal for higher inflation rates

Keywords: Money Search; Auctions (search for similar items in EconPapers)
JEL-codes: E31 (search for similar items in EconPapers)
Date: 2006
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:red:sed006:708

Access Statistics for this paper

More papers in 2006 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann (chuichuiche@gmail.com).