IDEAS home Printed from https://ideas.repec.org/p/cdl/ucsdec/qt4tn3m0tx.html
   My bibliography  Save this paper

Equilibrium and Media of Exchange in A Convex Trading Post Economy with Transaction Cost

Author

Listed:
  • Starr, Ross M.

Abstract

General equilibrium is investigated with N commodities traded at N(N−1) 2 commodity-pairwise trading posts. Trade is a resource-using activity recovering transaction costs through the spread between bid (wholesale) and ask (retail) prices (quoted as commodity rates of exchange). Budget constraints are enforced at each trading post separately implying demand for a carrier of value between trading posts, commodity money. Existence of general equilibrium is established under conventional convexity and continuity conditions while structuring the price space to account for distinct bid and ask prices. Trade in media of exchange (commodity money) is the difference between gross and net inter-post trades.

Suggested Citation

  • Starr, Ross M., 2007. "Equilibrium and Media of Exchange in A Convex Trading Post Economy with Transaction Cost," University of California at San Diego, Economics Working Paper Series qt4tn3m0tx, Department of Economics, UC San Diego.
  • Handle: RePEc:cdl:ucsdec:qt4tn3m0tx
    as

    Download full text from publisher

    File URL: https://www.escholarship.org/uc/item/4tn3m0tx.pdf;origin=repeccitec
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ross M. Starr, 2003. "Why is there money? Endogenous derivation of `money' as the most liquid asset: a class of examples," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(2), pages 455-474, March.
    2. Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-954, August.
    3. Shapley, Lloyd S & Shubik, Martin, 1977. "Trade Using One Commodity as a Means of Payment," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 937-968, October.
    4. Hahn, F H, 1971. "Equilibrium with Transaction Costs," Econometrica, Econometric Society, vol. 39(3), pages 417-439, May.
    5. Foley, Duncan K., 1970. "Economic equilibrium with costly marketing," Journal of Economic Theory, Elsevier, vol. 2(3), pages 276-291, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Starr, Ross M., 2008. "Commodity money equilibrium in a convex trading post economy with transaction costs," Journal of Mathematical Economics, Elsevier, vol. 44(12), pages 1413-1427, December.
    2. Starr, Ross M., 2007. "Equilibrium and Media of Exchange in a Convex Trading Post Economy With Transaction Costs," University of California at San Diego, Economics Working Paper Series qt3wx6s4z8, Department of Economics, UC San Diego.
    3. Starr, Ross M., 2007. "Commodity Money Equilibrium in a Convex Trading Post Economy with Transaction Costs," University of California at San Diego, Economics Working Paper Series qt8rj7w6vg, Department of Economics, UC San Diego.
    4. Starr, Ross M., 2006. "Equilibrium and Media of Exchange in a Convex Trading Post Economy with Transaction Costs," University of California at San Diego, Economics Working Paper Series qt0ct6f4nc, Department of Economics, UC San Diego.
    5. Dubey, Pradeep & Sahi, Siddhartha & Shubik, Martin, 2018. "Money as minimal complexity," Games and Economic Behavior, Elsevier, vol. 108(C), pages 432-451.
    6. Pradeep Dubey & Siddhartha Sahi & Martin Shubik, 2014. "Minimally complex exchange mechanisms: Emergence of prices, markets, and money," Department of Economics Working Papers 14-01, Stony Brook University, Department of Economics.
    7. Starr, Ross M., 2010. "The Jevons double coincidence condition and local uniqueness of money: An example," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 786-792, September.
    8. Starr, Ross M., 2006. "Commodity Money Equilibrium in a Walrasian Trading Post Model: An Example," University of California at San Diego, Economics Working Paper Series qt3267p6wj, Department of Economics, UC San Diego.
    9. Starr, Ross M., 2014. "Liquidity Creates Money and Debt: An Intertemporal Linear Trading Post Model," University of California at San Diego, Economics Working Paper Series qt1vk1k4fm, Department of Economics, UC San Diego.
    10. Dubey, Pradeep & Sahi, Siddhartha & Shubik, Martin, 2018. "Graphical exchange mechanisms," Games and Economic Behavior, Elsevier, vol. 108(C), pages 452-465.
    11. Ross M. Starr, 2012. "Why is there Money?," Books, Edward Elgar Publishing, number 13763.
    12. Starr, Ross M, 2005. "Equilibrium and Media of Exchange in a Convex Trading Post Economy with transaction Costs," University of California at San Diego, Economics Working Paper Series qt7q79h1vf, Department of Economics, UC San Diego.
    13. Starr, Ross M., 2014. "Liquidity Creates Money and Debt: An Intertemporal Linear Trading Post Model," University of California at San Diego, Economics Working Paper Series qt90g2070h, Department of Economics, UC San Diego.
    14. Starr, Ross M., 2008. "Commodity Money in a Convex Trading Post Sequence Economy," University of California at San Diego, Economics Working Paper Series qt2s87k9cj, Department of Economics, UC San Diego.
    15. Starr, Ross M, 2005. "Commodity Money Equilibrium in a Walrasian Trading Post Model: An Elementary Example," University of California at San Diego, Economics Working Paper Series qt1200q2z3, Department of Economics, UC San Diego.
    16. Starr, Ross M., 1999. "Why is there Money? Convergence to a Monetary Equilibrium in a General Equilibrium Model with Transaction Costs," University of California at San Diego, Economics Working Paper Series qt253553nn, Department of Economics, UC San Diego.
    17. Starr, Ross M., 2002. "Existence of Uniqueness of "Money" in General Equilibrium: Natural Monopoly in the Most Liquid Asset," University of California at San Diego, Economics Working Paper Series qt660465rm, Department of Economics, UC San Diego.
    18. Ross Starr, 2000. "Why is there Money? Convergence to a Monetary Equilibrium in a General Equilibrium Model with Transaction Costs," Econometric Society World Congress 2000 Contributed Papers 0058, Econometric Society.
    19. Starr, Ross M., 2008. "Mengerian Saleableness and Commodity Money in a Walrasian Trading Post Example," University of California at San Diego, Economics Working Paper Series qt92k1n9mn, Department of Economics, UC San Diego.
    20. Starr, Ross & Spini, Pietro Emilio, 2022. "Thick Market Externality and Concentration of `Money'," University of California at San Diego, Economics Working Paper Series qt8qr0r0n7, Department of Economics, UC San Diego.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdl:ucsdec:qt4tn3m0tx. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lisa Schiff (email available below). General contact details of provider: https://edirc.repec.org/data/deucsus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.