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Some Economics of Private Digital Currency

Author

Listed:
  • Joshua S. Gans
  • Hanna Halaburda

Abstract

This paper reviews some recent developments in digital currency, focusing on platform-sponsored currencies such as Facebook Credits. In a model of platform management, we find that it will not likely be profitable for such currencies to expand to become fully convertible competitors to state-sponsored currencies.

Suggested Citation

  • Joshua S. Gans & Hanna Halaburda, 2013. "Some Economics of Private Digital Currency," Staff Working Papers 13-38, Bank of Canada.
  • Handle: RePEc:bca:bocawp:13-38
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    References listed on IDEAS

    as
    1. Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
    2. E. Glen Weyl, 2010. "A Price Theory of Multi-sided Platforms," American Economic Review, American Economic Association, vol. 100(4), pages 1642-1672, September.
    3. Jean-Charles Rochet & Jean Tirole, 2002. "Cooperation Among Competitors: Some Economics Of Payment Card Associations," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 549-570, Winter.
    4. repec:rje:randje:v:37:y:2006:3:p:668-691 is not listed on IDEAS
    5. Rockoff, Hugh, 1974. "The Free Banking Era: A Reexamination," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 6(2), pages 141-167, May.
    6. Gans Joshua S & King Stephen P, 2003. "The Neutrality of Interchange Fees in Payment Systems," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-18, January.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Huberman, Gur & Leshno, Jacob D. & Moallemi, Ciamac, 2017. "Monopoly without a monopolist : An economic analysis of the bitcoin payment system," Research Discussion Papers 27/2017, Bank of Finland.
    2. Ben Fung & Miguel Molico & Gerald Stuber, 2014. "Electronic Money and Payments: Recent Developments and Issues," Discussion Papers 14-2, Bank of Canada.
    3. Neil Gandal & Hanna Halaburda, 2014. "Competition in the Cryptocurrency Market," Working Papers 14-17, NET Institute.
    4. Jonathan Chiu & Thorsten Koeppl, 2017. "The Economics of Cryptocurrencies - Bitcoin and Beyond," Working Papers 1389, Queen's University, Department of Economics.
    5. Neil Gandal & Hanna Halaburda, 2016. "Can We Predict the Winner in a Market with Network Effects? Competition in Cryptocurrency Market," Games, MDPI, Open Access Journal, vol. 7(3), pages 1-21, July.
    6. Beata Szetela & Grzegorz Mentel & Stanislaw Gedek, 2016. "Dependency analysis between Bitcoin and selected global currencies," Dynamic Econometric Models, Uniwersytet Mikolaja Kopernika, vol. 16, pages 133-144.
    7. Lo, Stephanie & Wang, J. Christina, 2014. "Bitcoin as money?," Current Policy Perspectives 14-4, Federal Reserve Bank of Boston.

    More about this item

    Keywords

    Bank notes; Economic models; Payment clearing and settlement systems;

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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