Money and price posting under private information

• 成果类型: Article
• 署名作者: Dong, Mei; Jiang, Janet Hua
• 署名单位: University of Technology Sydney; Bank of Canada
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2013.12.005
• 发表日期: 2014
• 页码: 740-777
• 关键词: money; price; Undirected search; private information

摘要

We study price posting with undirected search in a search-theoretic monetary model with divisible money and divisible goods. Ex ante homogeneous buyers experience match-specific preference shocks in bilateral trades. The shocks follow a continuous uniform distribution, and the realizations of the shocks are private information. We show that there exists a unique monetary equilibrium for generic values of the inflation rate. In equilibrium, each seller posts a continuous pricing schedule that exhibits quantity discounts. Buyers may spend nothing, a fraction or all of their money holdings, depending on their preference-shock realizations. Inflation reduces the extent of non-linear pricing. The model captures the hot-potato effect of inflation along both the extensive margin, as an increase in the trading probability, and the intensive margin, as higher fractions of money being spent. (C) 2014 Elsevier Inc. All rights reserved.