The Jevons double coincidence condition and local uniqueness of money: An example |
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Authors: | Ross M Starr |
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Institution: | Economics Dept. 0508, University of California, San Diego, 9500 Gilman Dr., La Jolla, CA 92093-0508, USA |
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Abstract: | Jevons’s double coincidence of wants condition is derived as the result of household level transaction costs in general equilibrium where N commodities are traded at (1/2)N(N−1) commodity-pairwise trading posts. Each household experiences a set-up cost on entering an additional trading post. Budget constraints are enforced at each trading post separately implying demand for a carrier of value between trading posts, commodity money. General equilibrium consists of prices so that each trading post clears. Existence and local uniqueness of commodity money in equilibrium can follow from the scale economy implied by the household set-up cost. |
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Keywords: | C62 D50 E40 |
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