Anonymous markets and monetary trading

Citation data:

Journal of Monetary Economics, ISSN: 0304-3932, Vol: 54, Issue: 7, Page: 1905-1928

Publication Year:
2007
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Citations 44
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Repository URL:
https://digitalcommons.chapman.edu/economics_articles/81
DOI:
10.1016/j.jmoneco.2006.11.002
Author(s):
Aliprantis, C. D.; Camera, Gabriele; Puzzello, D.
Publisher(s):
Elsevier BV
Tags:
Economics, Econometrics and Finance; Anonymity; Money; Infinite Games; matching; Social Norms; Economy; Price; Model; Economics
article description
We study infinite-horizon monetary economies characterized by trading frictions that originate from random pairwise meetings, and commitment and enforcement limitations. We prove that introducing occasional trade in ‘centralized markets’ opens the door to an informal enforcement scheme that sustains a non-monetary efficient allocation. All is required is that trading partners be patient and their actions be observable. We then present a matching environment in which trade may occur in large markets and yet agents’ trading paths cross at most once. This allows the construction of models in which infinitely lived agents trade in competitive markets where money plays an essential role.