Large Monetary Trade, Market Specialization and Strategic Behaviour

  • Meenakshi Rajeev
Part of the Theory and Decision Library book series (TDLC, volume 18)

Abstract

This paper looks at the role of money as a medium of exchange in a competitive set-up. Together with this we have explored why, historically speaking, monetary trade and market specialization always go hand in hand. The set-up taken up for the purpose is derived from the well-known frame-work of Kiyotaki and Wright (1989). Our frame-work extends the above set-up to incorporate exchanges through trading posts for different pairs of goods. Here each agent is trying to choose his optimal strategy for trade given the best strategies of the others. The exercise reveals how a monetized trading post set-up can manifest itself through the agent’s optimizing behaviour.

Keywords

Nash Rium 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Aiyagari, S.R. and N. Wallace (1991): Existence of steady states with positive consumption in Kiyotaki-Wright model: Review of Economic Studies, 58, 901–916.CrossRefGoogle Scholar
  2. Dasgupta, D. and M. Rajeev: A note on feasibility criteria in monetary trade, the Japanese Economic Review, forthcoming.Google Scholar
  3. Hicks, J. (1967): Critical essays in monetary theory, ELBS and Oxford University Press.Google Scholar
  4. Kiyotaki, N. and R. Wright (1989): On money as a medium of exchange, Journal of Political Economy, 97, 927–954.CrossRefGoogle Scholar
  5. Kiyotaki, N. and R. Wright (1991): A contribution to the pure theory of money, Journal of Economic Theory, 53, 215–235.CrossRefGoogle Scholar
  6. Kiyotaki, N. and R. Wright (1993): A search theoretic approach to monetary economics, American Economic Review, 83, 63–77.Google Scholar
  7. Menger, K. (1892): On the origin of money, Economic Journal 2, 239–255.CrossRefGoogle Scholar
  8. Ostroy, J.M. and R.M. Starr (1974): Money and the decentralization of excahnge, Econometrica, 42, 1093–1113.CrossRefGoogle Scholar
  9. Ostroy, J.M. and R.M. Starr (1990): The transactions role of money, in Handbook of Monetary Economics. Google Scholar
  10. Rajeev, M. (1996) : Money and Markets, Occasional Paper No. 157, CSSS, Calcutta.Google Scholar
  11. Starr, R.M. (1972): The structure of exchange in barter and monetary economics, Quarterly Journal of Economics, LXXXVI, 290–302.CrossRefGoogle Scholar
  12. Starr, R.M. (1976): Decentralized non-monetary trade, Econometrica 44, 1087–1089.CrossRefGoogle Scholar
  13. Walras, L. (1900) : Elements of pure economics, translated and edited by W. Jasse, Homewood Illinois, Irwin.Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 1997

Authors and Affiliations

  • Meenakshi Rajeev
    • 1
  1. 1.Centre for Studies in Social SciencesCalcutta - 29India

Personalised recommendations