If an exchange economy is modeled as a strategic market game with one commodity serving as a money, then if there is no credit available and if all traders are insignificant in size, so that an individual does not influence prices, the noncooperative equilibria (NEs) of the game will coincide with the competitive equilibria of the exchange economy provided that there is enough money to facilitate trade. The meaning of "enough money" is that the NEs are interior. In other words the constraint that an individual cannot spend more of the means of payment than he holds is not binding on any individual's plans. The condition on enough money is characterized both by the total amount of money in the system and its distribution. It is possible that an economy may not have enough money no matter how it is distributed; it is also possible that a redistribution will give rise to interior solutions. These statements are made precise and illustrated by means of specific examples. If there is enough money but it is maldistributed it is shown that a loan market "100 per cent backed by gold" will bring efficiency.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)