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Full-Text Articles in Social and Behavioral Sciences
Anonymous Markets And Monetary Trading, C. D. Aliprantis, Gabriele Camera, D. Puzzello
Anonymous Markets And Monetary Trading, C. D. Aliprantis, Gabriele Camera, D. Puzzello
Economics Faculty Articles and Research
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 …
Trading Horizons And The Value Of Money, Gabriele Camera, Filip Vesely
Trading Horizons And The Value Of Money, Gabriele Camera, Filip Vesely
Economics Faculty Articles and Research
This paper shows that flat money can be feasible and essential even if the trading horizon is finite and deterministic. The result hinges on two features of our model. First, individual actions can affect the future availability of productive resources. So, agents may be willing to sell for money, even if on that date they have no reason to accept it. This makes monetary trade feasible in all preceding dates. Second, agents are anonymous and direct their search for partners. So, gift-giving arrangements may be prevented because agents can misrepresent their consumption needs. This makes money essential in exploiting any …