Equilibrium Price Dispersion in a Matching Model with Divisible Money

K. Kamiya, T. Sato

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    Abstract

    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.
    Original languageEnglish
    Place of PublicationTilburg
    PublisherMicroeconomics
    Number of pages28
    Volume2002-118
    Publication statusPublished - 2002

    Publication series

    NameCentER Discussion Paper
    Volume2002-118

    Keywords

    • equilibrium analysis
    • prices
    • money

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