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Coexistence of several currencies in presence of increasing returns to adoption

Alex Lamarche-Perrin, André Orléan and Pablo Jensen

Physica A: Statistical Mechanics and its Applications, 2018, vol. 496, issue C, 612-619

Abstract: 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)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:496:y:2018:i:c:p:612-619

DOI: 10.1016/j.physa.2017.12.117

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Physica A: Statistical Mechanics and its Applications is currently edited by K. A. Dawson, J. O. Indekeu, H.E. Stanley and C. Tsallis

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