Coexistence of several currencies in presence of increasing returns to adoption
André Orléan and
Physica A: Statistical Mechanics and its Applications, 2018, vol. 496, issue C, 612-619
We present a simplistic model of the competition between different currencies. Each individual is free to choose the currency that minimizes his transaction costs, which arise whenever his exchanging relations have chosen a different currency. We show that competition between currencies does not necessarily converge to the emergence of a single currency. For large systems, we prove that two distinct communities using different currencies in the initial state will remain forever in this fractionalized state.
Keywords: Currency; Multiple equilibria; Dynamics; Random graphs; Communities (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:496:y:2018:i:c:p:612-619
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