Money and specialization

Shouyong Shi

Economic Theory, 1997, vol. 10, issue 1, 99-133

Abstract: This paper examines the relationship between specialization and the use of money in two versions of the search-theoretic monetary model. The first version establishes a surprising result that specialization is more likely to occur in a barter economy than in a monetary economy. The result is reversed in the second version where a different specification of preferences is adopted to limit the scope of barter. This contrast between the results provides a concrete illustration of the general argument that money encourages specialization only when it enlarges the extent of the market.

JEL-codes: D40 E40 (search for similar items in EconPapers)
Date: 1997
Note: Received: January 31, 1995; revised version August 12, 1996
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Citations: View citations in EconPapers (7)

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