Search in the Product Market and the Real Business Cycle

Mathä, Thomas Y.;Pierrard, Olivier
(2009) , 29 pages

Files

2009019.pdf
  • Open Access
  • Adobe PDF
  • 507.94 KB
Download

Details

Authors
  • Mathä, Thomas Y.Central Bank of Luxembourg
    Author
  • Pierrard, OlivierUCLouvain
    Author
Abstract
Empirical evidence suggests that most firms operate in imperfectly competitivemarkets. We develop a search-matching model between wholesalers and retailers. Firms face search costs and form long-term relationships. Price bargain results in both wholesaler and retailer markups, depending on firms’ relative bargaining power. We simulate the model to explore the role of product market search frictions in business cycles. We show that the way search costs are modelled is crucial to provide a realistic picture of firms’ business environment and improve the cyclical properties of an otherwise standard real business cycle model.
Affiliations

Citations

  • APA
  • Chicago
  • FWB

Mathä, T. Y., & Pierrard, O. (2009). Search in the Product Market and the Real Business Cycle (IRES Discussion papers 2009019). https://hdl.handle.net/2078.5/249806