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Money and specialization

Author

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  • Shouyong Shi

    (Department of Economics, Queen's University, Kingston, Ontario, CANADA K7L 3N6)

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.

Suggested Citation

  • Shouyong Shi, 1997. "Money and specialization," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 10(1), pages 99-133.
    • Handle: RePEc:spr:joecth:v:10:y:1997:i:1:p:99-133
    Note: Received: January 31, 1995; revised version August 12, 1996
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    Citations

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    Cited by:

    1. Charlot, Olivier & Decreuse, Bruno & Granier, Pierre, 2005. "Adaptability, productivity, and educational incentives in a matching model," European Economic Review, Elsevier, vol. 49(4), pages 1007-1032, May.
    2. Williamson, Stephen & Wright, Randall, 2010. "New Monetarist Economics: Models," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 2, pages 25-96, Elsevier.
    3. Bruno Decreuse, 2008. "Choosy Search And The Mismatch Of Talents," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(3), pages 1067-1089, August.
    4. Shouyong Shi, 2002. "The Extent of the Market and the Optimal Degree of Specialization," Working Papers shouyong-02-02, University of Toronto, Department of Economics.
    5. Camera, G., 2001. "Search, Dealers, and the Terms of Trade," Purdue University Economics Working Papers 1140, Purdue University, Department of Economics.
    6. Decreuse, Bruno & Granier, Pierre, 2013. "Unemployment benefits, job protection, and the nature of educational investment," Labour Economics, Elsevier, vol. 23(C), pages 20-29.
    7. Jun Zhang & Haibin Wu, 2004. "Money, Technology Choice and Pattern of Exchange in Search Equilibrium," Econometric Society 2004 North American Summer Meetings 212, Econometric Society.

    More about this item

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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