Publication:
A Theory of Commerce

Thumbnail Image
Identifiers
URI: https://hdl.handle.net/10016/5318
ISSN: 0022-0531
DOI: 10.1016/j.jet.2004.04.002
Files
theory_jerez_JET_2005_ps.pdf (808.5 KB)
Publication date
2005
Defense date
Authors
Advisors
Tutors
Journal Title
Journal ISSN
Volume Title
Publisher
Elsevier
Impact
Google Scholar
Export
Research Projects
Organizational Units
Journal Issue
Abstract
The theory of commerce advanced here captures prominent features of retail trade: large employment, congestion effects, anonymous posted prices, and quantity discounts. This theory is built around a directed search model where buyers’ preferences are private information. The analytical solution is easily inserted in a Neoclassical growth framework. In this framework, the parameters of retail trade are calibrated using commercial margins and employment. Welfare properties depend on the sellers’ ability to charge two-tier prices. With two-tier prices, the directed search equilibrium is efficient. Otherwise, it is not. This contrasts with the full information benchmark, where directed search is always efficient.
Description
Keywords
Retail trade, Directed search, Ex ante price offers, Private information
Bibliographic citation
Journal of Economic Theory. 2005, vol. 122, nº 1, p. 60-99
Collections
DE - Artículos de Revistas
Economists Online