Price setting, price dispersion, and the value of money: or, the law of two prices

Curtis, Elisabeth Soller; Wright, Randall

doi:10.1016/j.jmoneco.2004.04.010

Cited by 40 publications

(10 citation statements)

References 20 publications

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“…20 Corbae, Temzelides, and Wright (2003) show that directed search models still have an essential role for money, but do not consider price posting, and the notion of competitive search equilibrium requires the combination of the two. For monetary models with posting and undirected search, see the references in Curtis and Wright (2004). 21 One can think of market makers as profit-maximizing agents who charge submarket participants an entry fee, which we assume must be nonnegative, or independent of agents' types; this fee will be 0 in equilibrium because the cost of opening a submarket is negligible.…”

Section: Competitive Search Equilibrium (Posting)mentioning

confidence: 99%

Money in Search Equilibrium, in Competitive Equilibrium, and in Competitive Search Equilibrium

2005

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We compare three market structures for monetary economies: bargaining (search equilibrium); price taking (competitive equilibrium); and price posting (competitive search equilibrium). We also extend work on the microfoundations of money by allowing a general matching technology and entry. We study how equilibrium and the effects of policy depend on market structure. Under bargaining, trade and entry are both inefficient, and inflation implies first-order welfare losses. Under price taking, the Friedman rule solves the first inefficiency but not the second, and inflation may actually improve welfare. Under posting, the Friedman rule yields the first best, and inflation implies second-order welfare losses. Copyright The Econometric Society 2005.

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Section: Competitive Search Equilibrium (Posting)mentioning

confidence: 99%

Money in Search Equilibrium, in Competitive Equilibrium, and in Competitive Search Equilibrium

2005

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“…For instance, seeHong et al (2002),Curtis and Wright (2004),Kamiya and Sato (2004), and the references therein.…”

mentioning

confidence: 99%

Housing Price Dispersion: An Empirical Investigation

Leung

Leong

Wong

2006

J Real Estate Finan Econ

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The efficiency of a market is challenged when price dispersion occurs. Previous studies focused on non-durable consumption goods. This study extends the analysis to the case of residential property, whose transactions are dominated by a second-hand market with many potential buyers and sellers. We demonstrate that housing price dispersion exists, and the degree of dispersion changes systematically with some macroeconomic factors, though the second and the third moment of the price distribution react differently to the macroeconomic variables. Some directions for future research are suggested. Copyright Springer Science + Business Media, Inc. 2006Price dispersion, Search models, Macroeconomic factor, Time aggregation, C320, D610, D830, E300, R310,

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“…The model builds on Camera and Winkler (), and Curtis and Wright (). Time is discrete and there is a [0, 1] continuum of agents who live forever with discount factor

β \equiv [1 / (1 + ρ)] \in (0, 1)

.…”

Section: Modelmentioning

confidence: 99%

“…That is, a type‐ k agent has greater valuation for good i than a type‐

k^{'}

agent if

α_{k, i} > α_{k^{'}, i}

and her own output does not provide utility

(α_{k, k} = 0)

. These different preferences across different types of agents are crucial to secure a monetary equilibrium with the price posting by a seller (see Camera and Winkler , Curtis and Wright ).…”

Section: Modelmentioning

confidence: 99%

Separation of Unit of Account from Medium of Exchange

Kim¹,

Lee²

2013

J of Money Credit Banking

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The separation of a unit of account (UoA) from a medium of exchange (MoE) in the commodity–money system is investigated by considering explicitly a seller's choice of UoA in terms of either an MoE or a unit of metal weight. If the likelihood of debasement of an MoE and its rate are high enough, the price is posted in terms of a unit of metal weight rather than an MoE. Interestingly, this MoE–UoA separated equilibrium yields the flexible nominal price, whereas an MoE–UoA integrated equilibrium yields the sticky one. This implies the nominal price rigidity in the fiat‐money system where MoE and UoA are integrated.

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Price setting, price dispersion, and the value of money: or, the law of two prices

Cited by 40 publications

References 20 publications

Money in Search Equilibrium, in Competitive Equilibrium, and in Competitive Search Equilibrium

Money in Search Equilibrium, in Competitive Equilibrium, and in Competitive Search Equilibrium

Housing Price Dispersion: An Empirical Investigation

Separation of Unit of Account from Medium of Exchange

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