Money and Price Dispersion

@inproceedings{Kocherlakota1998MoneyAP,
  title={Money and Price Dispersion},
  author={Narayana Kocherlakota and Gabriele Camera and Dean Corbae},
  year={1998}
}
We relax restrictions on the storage technology in a prototypical monetary search model to study price dispersion. When multiple units of currency can be stored, buyers and sellers enter matches with potentially different willingness to buy or sell. Across the distribution of possible bilateral matches, prices will generally differ even though agents have identical preferences and technologies. We provide existence conditions for a particularly simple equilibrium pattern of exchange and prices… CONTINUE READING
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