Economic Theory

, Volume 19, Issue 1, pp 187–201 | Cite as

A strategic market game with seigniorage costs of Fiat money

  • Martin Shubik
  • Dimitrios P. Tsomocos
Exposita Notes


A model that includes the cost of producing money is presented and the nature of the inefficient equilibria in the model are examined. It is suggested that if one acknowledges that transactions are a form of production, which requires the consumption of resources, then the concept of Pareto optimality is inappropriate for assessing efficiency. Instead it becomes necessary to provide an appropriate comparative analysis of alternative transactions mechanisms in the appropriate context.

Keywords and Phrases: Strategic market games, Seigniorage costs, Inefficiency. 
JEL classification: D51, E51. 


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Copyright information

© Springer-Verlag Berlin Heidelberg 2002

Authors and Affiliations

  • Martin Shubik
    • 1
  • Dimitrios P. Tsomocos
    • 2
  1. 1.Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520–8281, USA (e-mail:
  2. 2.Financial Industry and Regulation Division, Bank of England, Threadneedle Street, London Ec2R 8AH, UK (e-mail:

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