A Theory of Money and Marketplaces

25 Pages Posted: 4 Feb 2005

See all articles by Akihiko Matsui

Akihiko Matsui

University of Tokyo - Faculty of Economics

Takashi Shimizu

Kansai University - Faculty of Economics

Abstract

This article considers an infinitely repeated economy with divisible fiat money. The economy has many marketplaces that agents choose to visit. In each marketplace, agents are randomly matched to trade goods. There exist a variety of stationary equilibria. In some equilibrium, each good is traded at a single price, whereas in another, every good is traded at two different prices. There is a continuum of such equilibria, which differ from each other in price and welfare levels. However, it is shown that only the efficient single-price equilibrium is evolutionarily stable.

Suggested Citation

Matsui, Akihiko and Shimizu, Takashi, A Theory of Money and Marketplaces. International Economic Review, Vol. 46, No. 1, pp. 35-59, February 2005. Available at SSRN: https://ssrn.com/abstract=660652

Akihiko Matsui (Contact Author)

University of Tokyo - Faculty of Economics ( email )

7-3-1 Hongo, Bunkyo-ku
Tokyo 113-0033
Japan

Takashi Shimizu

Kansai University - Faculty of Economics ( email )

3-3-35 Yamatecho
Suita, Osaka, 564-8680
Japan

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