An alternative approach to search frictions

R. Lagos

    Research output: Contribution to journalArticlepeer-review

    Abstract

    This paper illustrates an alternative approach to modeling search frictions. Frictions are not assumed to exist, but are shown to arise endogenously as a distinctive feature of the set of equilibria that correspond to a particular range of parameter values. The model's spatial structure and the agents' moving decisions are explicitly spelled out, allowing the number of contacts that occur to depend on the way agents choose to locate themselves. An aggregate matching function is shown to exist, and its behavior with respect to changes in parameters such as distances between locations, the agents' payoffs, and the sizes of the populations of searchers on each side of the market is completely characterized.

    Original languageEnglish (US)
    Pages (from-to)851-873
    Number of pages23
    JournalJournal of Political Economy
    Volume108
    Issue number5
    DOIs
    StatePublished - 2000

    ASJC Scopus subject areas

    • Economics and Econometrics

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