mber of traders who ?nd partners and thus can consume, ??( ?). The pool is increased by the number of agents who have a production opportunity and who decide to produce: (1 ??)??( ??), i.e., the number of non-searchers times the probability of a production opportunity times the probability that the production cost is below the cuto ?cost, ??. Flow equilibrium implies: ??( ?) = (1 ??)??( ??) ?(1) The cuto ?cost is to be determined in equilibrium. Production oppor- tunities are accepted for ?≤??and rejected for ????. To determine the cuto ?cost, consider the ?ow utility of a searching consumer which is given as ???= ?( ?) [ ??( ?????)] ?(2) where ??is the expected lifetime utility of a searching agent and ??the expected lifetime utility of an agent who does not search. The searching 9
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