A dynamic equilibrium model of search, production, and exchange

Michele Boldrin, Nobuhiro Kiyotaki, Randall Wright

Research output: Contribution to journalArticlepeer-review

23 Scopus citations


We study a general equilibrium model where agents search for production and trading opportunities, that generalizes the existing literature by considering a large number of differentiated commodities and agents with idiosyncratic tastes. Thus, agents must choose nontrivial exchange as well as production strategies. We consider decreasing, constant, and increasing returns to scale in the matching technology, and characterize the circumstances under which there exist multiple steady state equilibria, or multiple dynamic equilibria for given initial conditions. We also characterize the existence of dynamic equilibria that are limit cycles. Equilibria are not generally optimal, and when multiple equilibria coexist they may be ranked. We analyze comparative statics and find that certain intuitive results do not necessarily hold without restrictions on the stochastic structure.

Original languageEnglish (US)
Pages (from-to)723-758
Number of pages36
JournalJournal of Economic Dynamics and Control
Issue number5-6
StatePublished - 1993
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics


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