Money and specialization
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.
Volume (Year): 10 (1997)
Issue (Month): 1 ()
|Note:||Received: January 31, 1995; revised version August 12, 1996|
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