Income distribution and exchange in a dynamic search model |
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Authors: | Ensar Yilmaz Burak Ünveren |
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Affiliation: | 1. Michigan State University, Department of Agricultural, Food and Resource Economics, Justin S. Morrill Hall of Agriculture, 446 West Circle Dr., Rm 202, East Lansing, MI 48824 USA;2. Purdue University, Department of Agricultural Economics, 403 West State Street, Krannert Building, West Lafayette, IN 47907, USA;3. China Agricultural University Department of International Trade College of Economics & Management, No.17, Qinghua East Road, Haidian District, Beijing, 100083, PR China;1. Department of Psychiatry, University of Rochester Medical Center, Rochester, NY, USA;2. The Affiliated Mental Health Center, Tongji Medical College of Huazhong University of Science & Technology, Wuhan, China;3. Department of Psychology, Zhejiang University, Hangzhou, China |
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Abstract: | This paper studies the link between income distribution and trade mechanisms in a dynamic search model with two-sided asymmetric information. Buyers and sellers have imperfect information about the income levels of the other group. Furthermore, asymmetry of information about incomes is the source of price dispersion. In such a frictional environment, we capture the effects of a change in inter- and intra-class income distribution on the trade mechanism, which is represented by the expected trade volume and the flux of buyers and sellers in the market. |
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