Template-type: ReDif-Paper 1.0
Author-Name: Herings, P. Jean-Jacques
Author-workplace-name: RS: GSBE Theme Data-Driven Decision-Making, RS: GSBE Theme Conflict & Cooperation, Microeconomics & Public Economics
Author-Name: Zhou, Yu
Title: Equilibria in Matching Markets with Soft and Hard Liquidity Constraints
Abstract: We consider a matching with contracts model in the presence of liquidity constraints on the buyers side. Liquidity constraints can be either soft or hard. A convergent sequence of economies with increasingly stringent soft liquidity constraints is an economy with hard liquidity constraints at the limit. The limit of a corresponding convergent sequence of competitive equilibria may fail to be a competitive equilibrium in the limit economy. We establish limit results of two alternative notions of competitive equilibrium, quantity-constrained competitive equilibrium and expectational equilibrium, which do not suffer from such discontinuity problems. The implications of these limit results are discussed.
Classification-JEL: c72,c78,d45,d52
Series: GSBE Research Memoranda
Creation-Date: 20210920
Number: 013
File-URL: https://cris.maastrichtuniversity.nl/ws/files/72858145/RM21013.pdf
File-Format: application/pdf
File-Size: 452721
Handle: Repec:unm:umagsb:2021013
DOI: 10.26481/umagsb.2021013