Efficient online exchange via fiat money
Mihaela Schaar,
Jie Xu and
William Zame
Economic Theory, 2013, vol. 54, issue 2, 248 pages
Abstract:
In many online systems, individuals provide services for each other; the recipient of the service obtains a benefit but the provider of the service incurs a cost. If benefit exceeds cost, provision of the service increases social welfare and should therefore be encouraged—but the individuals providing the service gain no (immediate) benefit from providing the service and hence have an incentive to withhold service. Hence, there is scope for designing a protocol that improves welfare by encouraging exchange. To operate successfully within the confines of the online environment, such a protocol should be distributed, robust, and consistent with individual incentives. This paper proposes and analyzes protocols that rely solely on the exchange of fiat money or tokens. The analysis has much in common with work on search models of money but the requirements of the environment also lead to many differences from previous analyses—and some surprises; in particular, existence of equilibrium becomes a thorny problem and the optimal quantity of money is different. Copyright Springer-Verlag Berlin Heidelberg 2013
Keywords: Online exchange; Token exchange; D51; E40 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)
Downloads: (external link)
http://hdl.handle.net/10.1007/s00199-013-0744-4 (text/html)
Access to full text is restricted to subscribers.
Related works:
Working Paper: Efficient Online Exchange via Fiat Money (2013) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:spr:joecth:v:54:y:2013:i:2:p:211-248
Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/199/PS2
DOI: 10.1007/s00199-013-0744-4
Access Statistics for this article
Economic Theory is currently edited by Nichoals Yanneils
More articles in Economic Theory from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().