A Dynamic Model Of Settlement

Cyril Monnet, Ted Loch Temzelides and Thorsten Koeppl

No 1053, Working Paper from Economics Department, Queen's University

Abstract: We investigate the role of settlement in a dynamic model of a payment system where the ability of participants to perform certain welfare-improving transactions is subject to random and unobservable shocks. In the absence of settlement, the full information first-best allocation cannot be supported due to incentive constraints. In contrast, this allocation is supportable if settlement is introduced. This, however, requires that settlement takes place with a sufficiently high frequency.

Keywords: Payment Systems; Settlement; Mechanism Design (search for similar items in EconPapers)
JEL-codes: C73 D02 D82 E40 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2006-02
New Economics Papers: this item is included in nep-cba, nep-com, nep-dge, nep-fmk and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1053.pdf First version 2006 (application/pdf)

Related works:
Journal Article: A dynamic model of settlement (2008)
Working Paper: A dynamic model of settlement (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:1053

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