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Minimum prices in a model with search frictions and price posting

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  • Cai, Xiaoming

Abstract

In this paper I consider the effects of a minimum price (maximum wage) in a random search model with price (wage) posting. I show that with a minimum price, the price distribution will have a mass point. If the minimum price is sufficiently high, the price distribution will become degenerate.

Suggested Citation

  • Cai, Xiaoming, 2015. "Minimum prices in a model with search frictions and price posting," Economics Letters, Elsevier, vol. 135(C), pages 61-64.
    • Handle: RePEc:eee:ecolet:v:135:y:2015:i:c:p:61-64
    DOI: 10.1016/j.econlet.2015.07.025
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Minimum price; Maximum wage; Price dispersion; Mass point;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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