Search Theory

When it is costly for a store (i.e., clearinghouse) to mediate trade, a speculative demand for money may arise. Trading money to another agent for a good, rather than trading good for good through a store, allows the money holder to obtain the good while avoiding the fee the store must charge to cover its costs. We show that when the mediation market is contestable, there are conditions in which the store must create and issue a form of fiat money to maintain control of the market. The equilibrium quantity of money is private money, determined by agent expectations and market forces.

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Most labor market search models focus on individuals, ignoring the fact that decisions are often made at the household level. We fill this gap by developing and estimating a household search model with on-the-job search and labor supply. We build on previous work (Dey and Flinn (2008) and Guler, Guvenen and Violante ( )) to propose a novel identification strategy for the risk aversion parameters and a specification test. We find that ignoring the household as unit of decision-making has relevant empirical consequences. In estimation, the individual search specification implies gender wage offer differentials twice as large as the household search specification. In the application, the individual search specification generates lower lifetime wage inequality for women than men while the household specification implies exactly the opposite. When we use our household model to simulate the effects of various labor policies on lifetime inequality, we find implications frequently different from those resulting from individual search models. JEL Codes: J64; D63; C63 * We would like to thank the editor and two referees for very useful comments and suggestions. We would also like to thank

Labor markets become more efficient in theory if jobseekers direct their search. Using online job board data, we show that high-wage ads attract more applicants as in directed search models. Due to distinctive data features, we also estimate significant but milder directed search for hidden (or implicit) wages, suggesting that ad texts and requirements tacitly convey wage information. Since explicit-wage ads often target unskilled workers, other estimates in the literature ignoring hidden-wage ads may suffer from selection bias. Moreover, job ad requirements are aligned with their applicants' traits, as predicted in directed search models with heterogeneity.

The paper studies a matching model with on-the-job search, transferable utility and heterogeneous agents. Matched agents can set the conditions under which a given match can be dissolved. It is shown that matched agents use sign-off fees to extract all capital gains from trade when a third agent is contacted. In equilibrium, this redistributes wealth towards less able individuals, reduces the likelihood that any given match will be rejected and, given the conditions, it yields efficiency. Although externalities arise when a match is formed and when turnover occurs, the decentralized outcome is efficient when the production function is sub-modular and the difference in abilities is big enough. The results obtained may provide theoretical support for the type of contracts used in some markets, such as sports markets.

As recent world events show, criminal and terrorist access to nuclear materials is a growing national concern. The national laboratories are taking the lead in developing technologies to counter these potential threats to our national security. Sandia National Laboratories, with support from Pacific Northwest National Laboratory and the Bechtel Nevada, Remote Sensing Laboratory, has developed QUEST (a model to Quantify Uncertain Emergency Search Techniques), to enhance the performance of organizations in the search for lost or stolen nuclear material. In addition, QUEST supports a wide range of other applications, such as environmental monitoring, nuclear facilities inspections, and searcher training. QUEST simulates the search for nuclear materials and calculates detector response for various source types and locations. The probability of detecting a radioactive source during a search is a function of many different variables, including source type, search location and structure geometry (including shielding), search dynamics (path and speed), and detector type and size. Through calculation of dynamic detector response, QUEST makes possible quantitative comparisons of various sensor technologies and search patterns. The QUEST model can be used as a tool to examine the impact of new detector technologies, explore alternative search concepts, and provide interactive searchlinspector training.

Recently D.J. Snower and the author have idea is the use of sales levels as feedback in an considered several models whereby a monopo-optimal search for the "hidden" demand curve. 1isticJirm chooses a sequence of price and pro-This paper surveys these models and those of D. duction levels so as to optimally learn about the Reyniers and introduces some extensions to the unknown demand curve it faces. The unifying literature.

To have confidence in the results of an archaeological survey, whether for heritage management or research objectives, we must have some assurance that the survey was carried out to a reasonably high standard. This paper discusses the use of Quality Assurance (QA) approaches and empirical methods for estimating surveys' effectiveness at discovering archaeological artifacts as a means for ensuring quality standards. We illustrate with the example of two surveys in Cyprus and Jordan in which resurvey, measurement of surveyor Bsweep widths,^and realistic estimates of survey coverage allow us to evaluate explicitly the probability that the survey missed pottery or lithics, as well as to decide when survey has been thorough enough to warrant moving to another survey unit.

Many goods are marketed after first stating a list price, with the expectation that the eventual sales price will differ. In this paper we first present a simple model of search behavior that includes the seller setting a list price. Holding constant the mean of the buyers' distribution of potential offers for a good, we assume that the greater the list price, the slower the arrival rate of offers but the greater is the maximal offer. This tradeoff determines the optimal list price, which is set simultaneously with the seller's reservation price. Comparative statics are derived through a set numerical sensitivity tests, where we show that the greater the variance of the distribution of buyers' potential offers, the greater is the ratio of the list price to expected sales price. Thus, sellers of atypical goods will tend to set a relatively high list price compared with standard goods. We test this hypothesis using data from the Columbus, Ohio housing market and find substantial support. We also find empirical support for another hypothesis of the model: atypical dwellings take longer to sell.

Visual search in an unstructured search field is a fruitful research area for computational modeling. Search models that describe relationship between search time and probability of target detection have been used for prediction of human search performance and provision of ideal goals for search training. Until recently, however, most of models were focused on detecting a single target in a search field, although, in practice, a search field includes multiple targets and search models for multiple targets may differ from search models for a single target. This study proposed a random search model for multiple targets, generalizing a random search model for a single target which is the most typical search model. To test this model, human search data were collected and compared with the model. This model well predicted human performance in visual search for multiple targets. This paper also proposed how to determine optimal stopping time in multiple-target search.

This paper analyzes the conditional probability of leaving unemployment of French married individuals from 1991 to 2002. We find that the effect of spousal labor income on unemployment duration is asymmetric for men and women. In particular, the probability of men to find a job is increasing in wife labor income, while it is decreasing in husband's earnings for women. To adjust for endogenous selection into marriage, we use the quarter of birth as an instrumental variable for the spousal wage. Finally, we show that introducing a breadwinner stigma in a joint job search model generates the positive correlation observed for men in the data.

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The optimal search path (OSP) problem is a single-sided detection search problem where the location and the detectability of a moving object are uncertain. A solution to this N P-hard problem is a path on a graph that maximizes the probability of finding an object that moves according to a known motion model. We developed constraint programming models to solve this probabilistic path planning problem for a single indivisible searcher. These models include a simple but powerful branching heuristic as well as strong filtering constraints. We present our experimentation and compare our results with existing results in the literature. The OSP problem is particularly interesting in that it generalizes to various probabilistic search problems such as intruder detection, malicious code identification, search and rescue, and surveillance.

Every year there are numerous cases of individuals becoming lost in remote wilderness environments. Principles of search theory have become a foundation for developing more efficient and successful search and rescue methods. Measurements can be taken that describe how easily a search object is to detect. These estimates allow the calculation of the probability of detectionthe probability that an object would have been detected if in the area. This value only provides information about the search area as a whole; it does not provide details about which portions were searched more thoroughly than others. Ground searchers often carry portable GPS devices and their resulting GPS track logs have recently been used to fill in part of this knowledge gap. We created a system that provides a detection likelihood map that estimates the probability that each point in a search area was seen well enough to detect the search object if it was there. This map will be used to aid ground searchers as they search an assigned area, providing real time feedback of what has been "seen." The maps will also assist incident commanders as they assess previous searches and plan future ones by providing more detail than is available by viewing GPS track logs.

This paper investigates the matching of seller and buyer firms in the market for technology licensing. By combining organizational learning theory with the industrial organization approach, we propose a matching model in which technological synergies in terms of relatedness and familiarity work as attractors and market competition as a repellant. Firms seek potential licensing partners by trying to maximize technological synergies, while attempting to minimize the competitive downsides, while also gaining access to dissimilar product markets, skills and resources. We hypothesize that when licensees engage in matches involving a partner that is technologically unrelated, ex ante familiarity with the licensors? technology is required. We also contend interdependence between technological learning and market competition: if partners are in different product markets, the likelihood of technology license contractual partnership increases with partners? technological relatedness. Using data on the formation of license partnerships in the global biopharmaceutical industry over the period 1994-2004, the paper by and large lends empirical support for our theoretical predictions. Jelcodes:O32,C25

We propose a new search-theoretic model of monetary exchange with indivisible assets, based on price posting instead of bargaining, and incorporating noisy search. This yields some familiar results, plus a lot more. The model admits multiple steady states due to the self-referential nature of liquidity. It admits cyclic, chaotic and stochastic equilibria, and compared to bargaining versions, the dynamics are more general and have better microfoundations. It generates price dispersion, with interesting efficiency implications, plus sticky prices and rational inattention. Parametric examples yield closed-form solutions. Based on these results, we suggest this should become a benchmark model in monetary economics.

La trascendencia del dinero como institucion en la sociedad actual, hace indispensable contar con una teoria que permita tanto explicar rigurosamente las razones por las cuales el dinero fiable tiene un valor positivo en equilibrio, como analizar la interaccion de este con el resto del sistema economico. Claramente en los modelos del dinero exogeno reconciliar estos dos objetivos es imposible, debido a que por definicion estos lo imponen exogenamente. Esta limitacion ha dado origen al desarrollo de los modelos endogenos del dinero, los cuales suponen una friccion en el intercambio que solo el dinero puede evitar. Dentro de estos destacan los modelos de generaciones traslapadas, de autopista y de busqueda. No obstante, estos ultimos han probado ser los mas utiles debido a la flexibilidad con que permiten introducir micro-fundamentos y analizar fenomenos conexos al dinero como la inflacion, la oferta monetaria, la distribucion optima de los acervos monetarios en equilibrio, entre otros.

We demonstrate the existence of periodic nonstationary equilibria with self-generating cycles in a simple model of random search. Our results provide a theory of synchronized sales based on product market search by heterogeneous consumers. That is, our model explains how it can be optimal for all sellers to follow a repeated pattern of posting a high price for several periods and then posting a low price for one period.

In this study we introduce a new potential data source on migration intentions in the form of online job seekers actively searching for a job in a country other than their current location. We characterize job seeker interest across national borders by measuring user behavior on a major job search website. We show the job search data are strongly positively related to available OECD migration data and also find that in a gravity model both the determinants and the relative importance of the determinants for job search are similar to those in the literature for realized migration.

Our paper analyzes and compares two attempts at integrating unemployment in macroeconomics. The first, due to Peter Diamond, consists in a search model exhibiting multiple equilibria and wherein cycles may be produced. The second is due to David Andolfatto and Monika Merz, who, more or less simultaneously, constructed models enabling the integration of the matching function into RBC modeling. In the first sections, we present the methodology upon which our paper is based—Axel Leijonhufvud’s decision-tree insight—and briefly describe these three economists’ motivations and the context in which they were working. We continue with recounting the birth and further development of the search paradigm upon which Diamond’s, Andolfatto’s, and Merz’s attempts were based. These preliminaries settled, we address the heart of the paper, the critical analysis of their respective contributions. Our interest lies specifically in how they made their way in the development of the field. We explain wh...

We develop a model of monetary exchange that avoids several common criticisms of the recent microfoundations literature. First, rather than random matching, we assume that buyers know the location of all sellers, and hence the process of finding a partner is deterministic, although trade is still stochastic since the number of buyers visiting a given seller is random. Second, given multilateral matching, rather than bargaining, we assume that goods are allocated according to second-price auctions. Third, given this mechanism, we do not have to assume agents can observe each other's money holdings or preferences, as is necessary for tractability with bargaining. A novel result is that homogeneous buyers hold different amounts of money, leading to equilibrium price dispersion. We find the closed-form solution for the distribution of money holdings. We characterize equilibrium and efficient monetary policy. * We thank Randy Wright for his support and encouragement. We benefitted from the comments of Ed Green, Guillaume Rocheteau and Ruilin Zhou, as well as conference and seminar participants. Earlier versions of this paper were circulated under the titles "Directed Multilateral Matching in a Monetary Economy" and "Dispersion of Money Holdings and Efficiency.

We develop a model of monetary exchange that avoids several common criticisms of the recent microfoundations literature. First, rather than random matching, we assume that buyers know the location of all sellers, and hence the process of finding a partner is deterministic, although trade is still stochastic since the number of buyers visiting a given seller is random. Second, given multilateral matching, rather than bargaining, we assume that goods are allocated according to second-price auctions. Third, given this mechanism, we do not have to assume agents can observe each other's money holdings or preferences, as is necessary for tractability with bargaining. A novel result is that homogeneous buyers hold different amounts of money, leading to equilibrium price dispersion. We find the closed-form solution for the distribution of money holdings. We characterize equilibrium and efficient monetary policy. * We thank Randy Wright for his support and encouragement. We benefitted from the comments of Ed Green, Guillaume Rocheteau and Ruilin Zhou, as well as conference and seminar participants. Earlier versions of this paper were circulated under the titles "Directed Multilateral Matching in a Monetary Economy" and "Dispersion of Money Holdings and Efficiency.

A search-theoretic model of the retail market for illegal drugs is developed. Trade occurs in bilateral, potentially long-lived matches between sellers and buyers. Buyers incur search costs when experimenting with a new seller. Moral hazard is present because buyers learn purity only after a trade is made. The model produces testable implications regarding the distribution of purity offered in equilibrium, and the duration of the relationships between buyers and sellers. These predictions are consistent with available data. The effectiveness of different enforcement strategies is evaluated, including some novel ones which leverage the moral hazard present in the market.

Nancy Cartwright views models as blueprints for nomological machines – machines that, if properly shielded, generate law-like behaviour or regularities. Marcel Boumans has argued that we can look for devices inside models, which enable us to measure aspects of these regularities. Therefore, if models do produce regular behaviour (Cartwright), they might perhaps generate numbers about phenomena in the world, provided we can locate a good measuring device in the model (Boumans). How do they do this? Models are often understood to consist of internal principles and bridge principles. Both of these play a role in the measuring process. This paper suggests that we can understand the internal principles to be responsible for generating the regularities displayed by the model – and for many users of the model, this is sufficient use. The bridge principles (following Cartwright – ‘the real bridge principles’) are a matter of picking the right mathematical representation to make the model wo...

views models as blueprints for nomological machines-machines which, if properly shielded, generate lawlike behaviour or regularities. Marcel Boumans has argued that we can look for devices inside models which enable us to measure aspects of these regularities. So, if models do produce regular behaviour (Cartwright), they might perhaps generate numbers about phenomena in the world, provided we can locate a good measuring device in the model (Boumans). How do they do this? Models are often understood to consist of internal principles and bridge principles. Both of these play a role in the measuring process. This paper suggests that we can understand the internal principles to be responsible for generating the regularities displayed by the model-and for many users of the model, this is sufficient use. The bridge principles (following Cartwright-"the real bridge principles") are a matter of picking the right mathematical representation to make the model work with respect to some real world case at hand. These "real" bridge principles may enable the model to generate numbers and so serve to make the model into a measuring device. This paper explores this construction of a measuring device of duration dependence of unemployment. Since search theory can't be made operational for this purpose duration models which model of the outflow process of unemployment with a Weibull function are taken as a representation of reservation wage setting in search models. As I show, this Weibull function serves as a bridge principle to make a measure of the elasticity of response between unemployment benefit and duration of unemployment. It enables measurement to take place by modelling behaviour according to some assumptions, which operate as constraints. While this Weibull function serves this purpose, its assumptions are arbitrary rather than connected to theory, and measurements generated with this bridge principle turn out to be highly sensitive to its specification. The Weibull function does enable the model to function as a measuring device, but the lack of ability to make newly invoked unobservable variables operational makes it of dubious worth.

We apply marital search theory to examine whether out-of-wedlock childbearing affects mate selection patterns among American women. Using 1980-1995 CPS data, we apply probit models with selection to account for potential selection bias due to differences in "marriageability" between women in and not in unions. Compared to those without unmarried births, women with unmarried births are more likely to cohabit than to marry, and they are more likely to have less-educated and older spouses or partners. White women with unmarried births are also more likely than those without to have husbands or partners of another race. Thus, women with unmarried births tend to cohabit and are less "well matched." These results have important implications for public policy that increasingly regards marriage as a panacea for low-income women. One of the major goals of the 1996 welfare reform bill (i.e., Personal Responsibility and Work Opportunity Reconciliation Act) is to reduce out-of-wedlock childbearing. Nonmarital childbearing has grown rapidly over the past three decades. Indeed, nonmarital births accounted for one-third of all U.S. births in 2000. High nonmarital fertility rates, coupled with declines in marriage and marital fertility, are responsible for the growth of female-headed single families with children (Smith et al. 1996). The rise in nonmarital fertility also reflects substantial declines in "legitimation" or so-called shotgun weddings (Parnell et al. 1994; Raley 2001). Pregnant, unmarried women are much less likely today than in the past to marry the fathers of their children and more likely to bear and rear children on their own. Trends in marriage and nonmarital fertility have clearly had major implications for family structure, children's living arrangements and economic well-being. Not surprisingly, efforts to promote marriage and reduce out-of-wedlock childbearing are a major part of congressional debates over the reauthorization of the 1996 welfare reform bill. State efforts to develop marriage promotion campaigns, initiate relationship skills programs among low-income couples, create economic incentives to marriage (e.g., marriage bonuses), and introduce abstinence education programs in the schools have been controversial. Such programs, although untested, have a singular purpose: to reduce poverty and welfare dependency among women and children. Female-headed families with children are disproportionately poor and dependent on welfare assistance. Indeed, most scholars agree that unmarried childbearing adversely affects women's educational attainment and earnings while their children often experience economic hardship, family instability and negative developmental outcomes An earlier version of this paper was presented at the 2003 annual meetings of the American Sociological Association, Atlanta. Support for this research was provided by a grant (1 R01 HD43035-01

This paper uses search theory to examine the role that risk preference (RP) plays in farmland preservation. Assuming that the distribution of the offer price is fixed, the analysis indicates that risk-averse agents have lower reservation prices than risk-neutral agents, and that agricultural land held by the former exits farming at a faster rate. The results alsb show that farmland preservation policies which increase reservation prices have a greater capitalization effect if agents are risk-loving, and that such policies, while effectively protecting the interest of land speculators, may be less effective in serving the needs of farming and farm-held open space.

We develop a model in which a single currency plays the role of medium of exchange in two countries, while their governments are free to determine their fiscal balance and the extent to which they need to extract seigniorage from the common currency. We show that the actions of each government affect the economic performance of the other country, due to their trade relationship and, mostly, due to their monetary integration. We then endogenize each government's fiscal policy, and find that in equilibrium they will choose higher deficits than if they did not share a currency. Moreover, their policy choices are inefficient in the sense that if they could negotiate and commit their fiscal policy, they would choose smaller deficits. The inefficiency is worst if one of the partners is very small, or very unproductive, relative to the other, as the moral hazard on the smaller or poorer government would be larger. Resumen Elaboramos un modelo en el cual una moneda única desempeña el papel de medio de cambio en dos países, mientras

This paper introduces an optimal algorithm for solving the discrete grid-based coverage path planning (CPP) problem. This problem consists in finding a path that covers a given region completely. First, we propose a CPP-solving baseline algorithm based on the iterative deepening depth-first search (ID-DFS) approach. Then, we introduce two branch-and-bound strategies (Loop detection and an Admissible heuristic function) to improve the results of our baseline algorithm. We evaluate the performance of our planner using six types of benchmark grids considered in this study: Coast-like, Random links, Random walk, Simple-shapes, Labyrinth and Wide-Labyrinth grids. We are first to consider these types of grids in the context of CPP. All of them find their practical applications in real-world CPP problems from a variety of fields. The obtained results suggest that the proposed branch-and-bound algorithm solves the problem optimally (i.e., the exact solution is found in each case) orders of magnitude faster than an exhaustive search CPP planner. To the best of our knowledge, no general CPP-solving exact algorithms, apart from an exhaustive search planner, have been proposed in the literature.

The contributions by the 2010 Nobel Prize winners in Economics stand out in examinations of the role of frictions in different markets, in which heterogeneities and specificities make a search process necessary in order to find a reasonable match between the parties in a transaction. The applications to labor markets are noteworthy, with major implications for the determinants of employment and unemployment, and for poli- cies on these matters. However, the findings can also be ex- trapolated to other kinds of markets and applications.

Many goods are marketed after first stating a list price, with the expectation that the eventual sales price will differ. In this paper we first present a simple model of search behavior that includes the seller setting a list price. Holding constant the mean of the buyers' distribution of potential offers for a good, we assume that the greater the list price, the slower the arrival rate of offers but the greater is the maximal offer. This tradeoff determines the optimal list price, which is set simultaneously with the seller's reservation price. Comparative statics are derived through a set numerical sensitivity tests, where we show that the greater the variance of the distribution of buyers' potential offers, the greater is the ratio of the list price to expected sales price. Thus, sellers of atypical goods will tend to set a relatively high list price compared with standard goods. We test this hypothesis using data from the Columbus, Ohio housing market and find substantial support. We also find empirical support for another hypothesis of the model: atypical dwellings take longer to sell.

A well–established fact in monetary theory is that a key ingredient for the essentiality of money is its role as a form of memory. In this paper we study a notion of memory that includes information about an agent's past actions and trading opportunities but, in ...

Labor markets become more efficient in theory if jobseekers direct their search. Using online job board data, we show that high-wage ads attract more applicants as in directed search models. Due to distinctive data features, we also estimate significant but milder directed search for hidden (or implicit) wages, suggesting that ad texts and requirements tacitly convey wage information. Since explicit-wage ads often target unskilled workers, other estimates in the literature ignoring hidden-wage ads may suffer from selection bias. Moreover, job ad requirements are aligned with their applicants' traits, as predicted in directed search models with heterogeneity.

All too often, the hard work that members of the scholarly community do to support our profession goes unrecognized. For the seventh year, the Editorial Board of Operations Research has decided to reward outstanding service to the journal's scholarly mission. Associate editors and referees who did an exceptionally professional job by submitting timely, unbiased, and thoughtful reviews were considered for the award. This award is just a small token of the appreciation for exceptional work performed on behalf of Operations Research and our profession. We thank these individuals for their effort to make Operations Research the premier journal of the field.

Interorganizational relationships in networks that enable organizations to leverage resources and access expertise located beyond firm boundaries are increasingly important sources of competitive advantage. Information technologies such as EDI play a significant role in enabling the creation and maintenance of buyer-supplier networks. Studies indicate that the deployment of IT in buyer-supplier relationships creates significant advantages for focal buying firms in networks (Mukhopadhyay, Kekre and Kalathur 1995). However, the ...

Study of wilderness search and rescue (WiSAR) incidents suggests a dependency on demographics as well as physical geography in relation to decisions made before/after becoming lost and subsequent locations in which subjects are found. Thus an understanding of the complex relationship between demographics and physical geography could enhance the responders' ability to locate the subject in a timely manner. Various global datasets have been organized to provide general distance and feature based geostatistical methods for describing this relationship. However, there is some question as to the applicability of these generalized datasets to local incidents that are dominated by a specific physical geography. This study consists of two primary objectives related to the allocation of geographic probability intended to manage the overall size of the search area. The first objective considers the applicability of a global dataset of lost person incidents to a localized environment with limited geographic diversity. This is followed by a comparison between a commonly used Euclidean distance statistic and an alternative travel-cost model that accounts for the influence of anthropogenic and landscape features on subject mobility and travel time. In both instances, lost person incident data from years 2000 to 2010 for Yosemite National Park is used and compared to a large pool of internationally compiled cases consisting of similar subject profiles.

Disability rolls have escalated in developed nations over the last 40 years. The UK stands out because the numbers on these benefits stopped rising when a welfare reform ("Jobcentre Plus") was introduced that integrated employment services and benefits for all categories of welfare recipients. The policy sharpened bureaucratic incentives to help move disability benefit recipients into jobs relative to unemployment insurance recipients. We exploit the staggered roll-out of the policy across geographical areas to identify treatment effects. In the long-run, the policy raised exits from disability benefits by 11% and did not significantly change unemployment outflows. This is consistent with a model in which reorganisation helps both groups, but bureaucrats shifted job-brokering efforts towards those on disability benefits and away from the unemployed. Interestingly, in the short-run the policy had a negative impact on exits from unemployment and no effect on exits from disability claims, suggesting important disruption effects. We estimate that it takes about six years for the estimated benefits of the reform to exceed its costs, which may be why welfare reforms are hard to introduce with myopic policy-makers. Our estimates imply that the response of disability outflows to Jobcentre Plus explain about 30% of the decline in the disability rolls between 2003 and 2008.

Social scientists have long used 'chain' metaphors, yet their methodological justification remains somewhat hazy. This paper offers a rationale for using chains to measure changes in economic welfare in urban and regional contexts. In contrast to the Marshallian surplus, which well describes situations in which price changes generate rents in a single market, chains are especially useful in markets where changes lead to the transmission of demand or supply through a series of markets characterized by sticky prices and markups. This argument is illustrated by reference to chain-driven analyses of local production, labor and housing markets. The institutional structures that underpin chain models, are stressed.

This paper investigates the relationship between money growth, inflation, and productive activity in a general equilibrium model where search frictions motivate the transactions role of money. The use of a multiple matching technique, where search frictions are captured by limited consumption variety, allows us to study price determination in a search-theoretic environment with divisible money and goods. We find that in such a setting, a positive feedback between work and shopping effort decisions create a channel by which inflation can positively influence real activity. This feature also creates the possibility of multiple steady state equilibria. We also analzye the impact of inflation on capital accumulation, the role search frictions play in determining the extent to which inflation distorts relative prices, and the effect of money growth on firm entry on trade frictions. In doing so, we demonstrate that a multiple matching model of money is amendable to study a wide range of traditional issues in monetary theory.

It IS straightforward to allow for job loss, with probability say, 5, in a given period in ihis model. However, the inclusion of job loss in this fashion does not alter the basic results presented below (see Lynch (1983)). This model, however, makes no attempt to model on-thejob search. If we allow the worker to engage in costless search while working, then ^ = / > and the elasticity of the reservation wage with respect to the benefit level becomes I. For a more detailed discussion of this see Mortensen (1986), pp. 869-77. C Blackwell Publishers Ltd 1995. 'Although the issue of attrition arises with the survey data, estimates of a probit equation determining survey participation show that the decision to participate in the survey was independent of control group status. As a result the examination of the impact of Restart is unaffected by the attrition.

The aim of this paper is to elucidate Keynes's Marshallian lineage. I argue that the result of bringing out the Marshallian antecedents of the General Theory highlights Keynes's failure to achieve the theoretical project he was striving at, namely to demonstrate an involuntary unemployment result in the arising of which nominal wage rigidity would play no role. In the first part of the paper, I reexamine Marshall's theory of value. This section's main conclusion is that no theory of unemployment is to be found in Marshall's writings. In section two, I study the literature spanning from Marshall to Keynes, focusing on Beveridge, Hicks and Pigou, in order to see whether the lacuna present in Marshall's writings happened to be filled. Documenting the emergence of the notion of frictional unemployment, I come to the conclusion that its arising went along with little theoretical elaboration. The third and last part of the paper is a critical reflection on the General Theory. I start by making the point that Keynes's theory of effective demand ought to be viewed as an extension of Marshall's analysis of firms' short-period production decisions. This enables me to bring out the decisive role played by the wage rigidity assumption in Keynes's reasoning. I claim that, except for this assumption, the differences between 'effective demand à la Marshall' and 'effective demand à la Keynes' are minor. I close my analysis of Keynes's reasoning by showing that no real removal of the nominal rigidity assumption is to be found in chapter 19 of the General Theory.