ABSTRACT
The economy comprises only self-employed agents. They fall into two classes. Either they are searching for a productive activity, i.e. for a tree that is worth climbing, or they are looking for a trading partner after having found a suitable tree. Agents who are searching for a production opportunity are called the ‘unemployed’, those who are searching for a trading opportunity, the ‘employed’ ([1982] 1991: 33). Every coconut tree bears the same number of coconuts yet trees vary in terms of the effort needed to reach and pick up the coconuts. The arrival of production possibilities is stochastic. The effort must be below some threshold pertaining to the individual willingness to act on production opportunities (the cut-off cost c*). Once agents are in possession of coconuts, they must find somebody also in possession of coconuts with whom they can trade.3
This is the second searching process. When it is over, trade takes place on a one-for-one basis, and the good is consumed.
