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Product market competition with crypto tokens and smart contracts

Author

Listed:
  • Chod, Jiri
  • Lyandres, Evgeny

Abstract

This paper models benefits of quoting output price in units of crypto token under duopolistic product market competition with switching costs. Pricing output in tokens provides a firm with a de facto second-mover advantage, raising its equilibrium profit. In addition, the firm can further increase its equilibrium profit by committing via a smart contract to the number of tokens sold. By focusing on utility tokens used at the product market competition stage, the paper highlights potential benefits of issuing crypto tokens that extend beyond the advantages of issuing security tokens at the venture financing stage.

Suggested Citation

  • Chod, Jiri & Lyandres, Evgeny, 2023. "Product market competition with crypto tokens and smart contracts," Journal of Financial Economics, Elsevier, vol. 149(1), pages 73-91.
    • Handle: RePEc:eee:jfinec:v:149:y:2023:i:1:p:73-91
    DOI: 10.1016/j.jfineco.2023.04.011
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    References listed on IDEAS

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    More about this item

    Keywords

    Crypto tokens; Smart contracts; Product market competition; Switching costs;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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