Money and the Decentralization of Exchange
A pairwise trading process is formulated subject to conditions of nonnegativity of traders' holdings and quid pro quo. It is shown that that: (i) There is a centralized procedure that achieves the equilibrium allocation for an arbitrary economy. (ii) It is not in general possible to find a decentralized procedure that achieves the equilibrium allocation for an arbitrary economy. (iii) In a monetary economy there is a decentralized procedure that achieves the equilibrium allocation. The usefulness of money is that it allows decentralization of the trading process.
|Date of creation:||1973|
|Publication status:||Published in Econometrica (November 1974), 42(6): 1093-1113|
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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.:
- Ostroy, Joseph M, 1973.
"The Informational Efficiency of Monetary Exchange,"
American Economic Review,
American Economic Association, vol. 63(4), pages 597-610, September.
- Joseph M. Ostroy, 1972. "The Informational Efficiency of Monetary Exchange," UCLA Economics Working Papers 021, UCLA Department of Economics.
- Ross M. Starr, 1972. "The Structure of Exchange in Barter and Monetary Economies," The Quarterly Journal of Economics, Oxford University Press, vol. 86(2), pages 290-302. Full references (including those not matched with items on IDEAS)
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