Abstract
Lotteries are introduced into Cavalcanti and Erosa (2008) [2], a version of Trejos and Wright (1995) [4] with aggregate shocks. Lotteries improve welfare and eliminate the two notable features of the optimum with deterministic trades: over-production and history-dependence. Moreover, the optimum can be supported by buyer take-it-or-leave-it offers.
Original language | English |
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Pages (from-to) | 382-388 |
Number of pages | 7 |
Journal | Journal of Economic Theory |
Volume | 147 |
Issue number | 1 |
DOIs |
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Publication status | Published - 2012 Jan |
Keywords
- Aggregate shock
- History-dependence
- Lottery
- Optimal allocation
- Random matching model of money
ASJC Scopus subject areas
- Economics and Econometrics