Search and Intermediation: Toward a Model of the Merchant Trader

A Dynamic Model of Search and Intermediation

This paper develops a dynamic model of an economy with search frictions in which homogeneous agents choose between specializing as producers or as merchants, and can change occupation at any time. Merchants operate alongside a decentralized search market and provide immediacy in trade in return for a price. Agents who know the location of a merchant have the option of paying the merchant’s pric...

Implementing E cient Allocations in a Model of Financial Intermediation

In a nite-trader version of the Diamond-Dybvig (1983) model, the symmetric, ex-ante e cient allocation is implementable by a direct mechanism (i.e., each trader announces the type of his own ex-post preference) in which truthful revelation is the strictly dominant strategy for each trader. When the model is modi ed by formalizing the sequential-service constraint (cf. Wallace, 1988), the truth-...

Implementing efficient allocations in a model of financial intermediation

In a finite-trader version of the Diamond-Dybvig (1983) model, the symmetric, ex-ante efficient allocation is implementable by a direct mechanism (i.e., each trader announces the type of his own ex-post preference) in which truthful revelation is the strictly dominant strategy for each trader. When the model is modified by formalizing the sequential-service constraint (cf. Wallace, 1988), the t...

Long-term and Short-term Effects of Financial Intermediation on Economic Growth

Financial intermediation in Iran's banking system is negatively affected at least in two ways. First, there are many similarities between financial intermediation and usurious activities in the common interpretation of interest-free banking law. This encourages the banks to participate in various commercial activities. Second, the price setting policies of the central bank makes investment more...

A Transmission Expansion Planning Model for Maximizing Merchant Investment