Bargains, Barter, and Money

Merwan Engineer, Shouyong Shi

Research output: Contribution to journalArticle

10 Scopus citations

Abstract

We examine a search money model in which there is a symmetric coincidence of wants in all barter matches. However, when bargaining outcomes are asymmetric across matches, the barter economy is inefficient. Then a robust monetary equilibrium exists provided that money holders enjoy adequate bargaining terms. Fiat money may be welfare improving. In contrast to the literature, it is the asymmetry in bargains across matches rather than asymmetry in demands that generates these results. Journal of Economic Literature Classification Numbers: C78, E40.

Original languageEnglish (US)
Pages (from-to)188-209
Number of pages22
JournalReview of Economic Dynamics
Volume4
Issue number1
DOIs
Publication statusPublished - Jan 1 2001

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All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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