Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5055661 | Economic Modelling | 2011 | 9 Pages |
This paper studies the impacts of income distribution on the efficiency of trade mechanism and rationing of agents who are priced out of trade in a dynamic search model with two-sided asymmetric information. Buyers and sellers have asymmetric information about valuations and incomes respectively. In such a frictional environment, the effects of several variants of changes in income distribution on efficiency of trading mechanism and the population of rationed buyers and sellers are elaborated.
Research Highlights⺠This paper searches out the effects of income distribution on efficiency of trading mechanism and rationing of agents. ⺠Changes in income distribution are effective on both efficiency and rationing. ⺠This connection is crucial for understanding the effects of external shocks and deriving policy implications.