TEL  Vol.5 No.1 , February 2015
Financial Intermediaries in a Search Theoretic Model of Bilateral Exchange
Abstract: This note investigates an effect of financial intermediaries on bilateral exchange. In a search theoretic framework, it is possible for Pareto inefficient outcomes in bilateral exchanges between firms and laborers, when firms are forced to secure liquidity through financial intermediaries and are unable to communicate the value of the firm to the intermediary. The quantity of labor supplied to firms in the model is below the Pareto optimal level.
Keywords: Search Theory
Cite this paper: Chang, A. (2015) Financial Intermediaries in a Search Theoretic Model of Bilateral Exchange. Theoretical Economics Letters, 5, 24-27. doi: 10.4236/tel.2015.51005.

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