Anonymous Markets and Monetary Trading

31 Pages Posted: 9 May 2013

See all articles by Charalambos D. Aliprantis

Charalambos D. Aliprantis

Purdue University - Krannert School of Management

Gabriele Camera

Chapman University - Economic Science Institute; University of Bologna - Dept. of Economics

Daniela Puzzello

Indiana University Bloomington - Department of Economics

Date Written: March 8, 2013

Abstract

We study an infinite-horizon economy with two basic frictions that are typical in monetary models. First, agents’ trading paths cross at most once due to pairwise trade and other meeting obstacles. Second, actions must be compatible with individual incentives due to commitment and enforcement limitations. We find that, with patient agents, relaxing the first friction by introducing centralized markets, opens the door to an informal enforcement scheme sustaining a non-monetary efficient allocation. Hence, we present a matching environment in which agents repeatedly access large markets and yet the basic frictions are retained. This allows the construction of models based on competitive markets in which money plays an essential role.

Suggested Citation

Aliprantis, Charalambos D. and Camera, Gabriele and Puzzello, Daniela, Anonymous Markets and Monetary Trading (March 8, 2013). Journal of Monetary Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2262188

Charalambos D. Aliprantis

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

Gabriele Camera (Contact Author)

Chapman University - Economic Science Institute ( email )

Orange, CA 92866
United States

HOME PAGE: http://www1.chapman.edu/~camera/

University of Bologna - Dept. of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Daniela Puzzello

Indiana University Bloomington - Department of Economics ( email )

Wylie Hall
Bloomington, IN 47405-6620
United States

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