Money in a Model of Prior Production and Imperfectly Directed Search

This paper considers the effect of monetary policy and inflation on retail markets. It analyzes a model in which: goods are dated and produced prior to being retailed, buyers direct their search on the basis of price and general quality and, buyers' match specific tastes are their private information. Sellers set the same price for all buyers but some do not value the good highly enough to purchase it. The market economy is typically inefficient as a social planner would have the good consumed. The Friedman rule represents optimal policy as long as there is free-entry of sellers. When the upper bound on the number of participating sellers binds sufficiently, moderate levels of inflation can be welfare improving.

Optimal Search Auctions

We study the design of profit maximizing single unit auctions under the assumption that the seller needs to incur costs to contact prospective bidders and inform them about the auction. With independent bidders’ types and possibly interdependent valuations, the seller’s problem can be reduced to a search problem in which the surplus is measured in terms of virtual utilities minus search costs. Compared to the socially efficient mechanism, the optimal mechanism features fewer participants, longer search conditional on the same set of participants, and inefficient sequence of entry.optimal auctions, search cost, search mechanism

Horizontally Differentiated Market Makers

I present a model of competition between two market makers who are horizontally differentiated. I first show that absent a search market for buyers and sellers, there is a continuum of symmetric equilibria. These equilibria are payoff equivalent for market makers, but affect buyers' and sellers' welfare in opposite ways. Second, I analyze the model when buyers and sellers can also exchange the good in search markets. The model with search markets shares many features with existing models, yet allows competing intermediaries to net a profit in equilibrium. Interestingly, the model exhibits a complementarity between intermediaries' profits in the presence of search markets. Third, I show that every equilibrium in a game with market makers is also an equilibrium in an appropriately defined game with matchmakersMarket making; intermediation and search; horizontal differentiation; market microstructure

Scalable grid resource allocation for scientific workflows using hybrid metaheuristics

Grid infrastructure is a valuable tool for scientific users, but it is characterized by a high level of complexity which makes it difficult for them to quantify their requirements and allocate resources. In this paper, we show that resource trading is a viable and scalable approach for scientific users to consume resources. We propose the use of Grid resource bundles to specify supply and demand combined with a hybrid metaheuristic method to determine the allocation of resources in a market-based approach. We evaluate this through the application domain of scientific workflow execution on the Grid

Dynamic Market for Lemons with Endogenous Quality Choice by the Seller

We analyze a dynamic market for lemons in which the quality of the good is endogenously determined by the seller. Potential buyers sequentially submit offers to one seller. The seller can make an investment that determines the quality of the item at the beginning of the game, which is unobservable to buyers. At the interim stage of the game, the information and payoff structures are the same as in the market for lemons. Our main result is that the possibility of trade does not create any efficiency gain if (i)the common discounting is low, and (ii)the static incentive constraints preclude the mutually agreeable ex-ante contract under which the trade happens with probability one. Our result does not depend on whether the offers by buyers are private or public.Bargaining, delay, impasse, observability, lemons problem.

Inflation, Price Dispersion, and Market Structure

In this paper, we use a unique micro-level data set from Istanbul to investigate the empirical relationship between inflation and price dispersion. In particular, our data set includes price observations from three distinct store types: bakkals (convenience stores), pazars (bazaars), and supermarkets. Our findings indicate that pazars exhibit the least amount of price dispersion on average, which is consistent with the fact that menu and search costs are very low in the pazar and that such sellers seem to have very little market power. Moreover, we find that several of the basic inflation-dispersion channels identified by the theoretical literature seem to be operating in our data.inflation, market structure, menu cost models, micro panel data, price dispersion

Policy Uncertainty and Informational Monopolies: The Case of Monetary Policy.

In this paper we have presented a model in which perfectly enticipated inflation is superneutral: if the variance of the money (or the growth rate of the money supply in the dynamic interpretation) supply is zero, the real equilibrium is independent of the mean of the money supply.ECONOMIC MODELS ; INFLATION ; MONETARY POLICY