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The essentiality of money in a trading post economy with random matching

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  • Alessandro Marchesiani

Abstract

This article studies how the structure of centralized markets can affect efficient allocation in anonymous decentralized trades. In line with previous studies, we show that efficiency in decentralized markets can be sustained in a moneyless finite-number-of-agents setting if agents are patient enough and the price is observed with noise. We additionally show that, if there are no gains from trade, then the price associated with an inactive centralized market is zero irrespective of the noise. Thus, the non-essentiality-of-money result is a more robust phenomenon when the centralized market acts only as a coordination device.

Suggested Citation

  • Alessandro Marchesiani, 2024. "The essentiality of money in a trading post economy with random matching," Oxford Economic Papers, Oxford University Press, vol. 76(3), pages 823-836.
    • Handle: RePEc:oup:oxecpp:v:76:y:2024:i:3:p:823-836.
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    File URL: http://hdl.handle.net/10.1093/oep/gpad038
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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