The main purpose of this paper is to show that, for any given parameter values, an equilibrium with dispersed prices (two-price equilibrium) exists in a simple matching model with divisible money presented by Green and Zhou (1998).We also show that our two-price equilibrium is unique in certain environments. Moreover, the welfare effect of price dispersion is analysed.
|Place of Publication||Tilburg|
|Number of pages||28|
|Publication status||Published - 2002|
|Name||CentER Discussion Paper|
- equilibrium analysis