We present a model in which inflation has a systematic effect on relative prices and welfare. The model focuces on the microeconomics of trade under inflation, and in particular, the role of long-term trading relationships in markets characterized by imperfect information.

The internet has not only reduced consumer search costs, but has also enabled more efficient and sophisticated search procedures. For example, online consumers can streamline their search process if appropriately defined categories of products and services are available. This paper proposes a...