Money, barter, and costly information acquisition ¬リニ

Endogenous information structure is analyzed in a search model of production and exchange under qualitative uncertainty by allowing agents to invest in an inspection technology at a fixed cost where incurring a higher cost permits quality to be recognized with higher probability. In any equilibria where agents acquire information, some bad commodities are always produced. The information acquisition promotes production and exchange of good commodities. As the information problem becomes severe, money can improve welfare by economizing on information costs. In the optimal monetary equilibrium, agents adopt trading strategies which contribute to the saving of information costs.