I study a search economy in which intermediaries are the driving force co-ordinating the economy on the use of a unique, common medium of exchange for transactions. If search frictions delay trade, intermediaries offering immediate exchange opportunities can make arbitrage gains from a price...

I study an example of a coordination game, and examine the robustness of equilibrium predictions with respect to changes in the information structure. I find two main results: First, the critique of Morris and Shin (1998) is not robust in the sense that if perfect common knowledge is viewed as...