IDEAS home Printed from https://ideas.repec.org/p/hal/pseptp/hal-01531277.html
   My bibliography  Save this paper

Coexistence of several currencies in presence of increasing returns to adoption

Author

Listed:
  • Alex Lamarche-Perrin

    (Phys-ENS - Laboratoire de Physique de l'ENS Lyon - ENS de Lyon - École normale supérieure de Lyon - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

  • André Orléan

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Pablo Jensen

    (Phys-ENS - Laboratoire de Physique de l'ENS Lyon - ENS de Lyon - École normale supérieure de Lyon - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

Abstract

We present a simplistic model of the competition between dierent currencies. Each individual is free to choose the currency that minimizes his transaction costs, which arise whenever his exchanging relations have chosen a dierent currency. We show that competition between currencies does not necessarily converge to the emergence of a single currency. For large systems, we prove that two distinct communities using dier-ent currencies in the initial state will remain forever in this fractionalized state.

Suggested Citation

  • Alex Lamarche-Perrin & André Orléan & Pablo Jensen, 2018. "Coexistence of several currencies in presence of increasing returns to adoption," PSE-Ecole d'économie de Paris (Postprint) hal-01531277, HAL.
    • Handle: RePEc:hal:pseptp:hal-01531277
    DOI: 10.13140/RG.2.2.29940.76162
    Note: View the original document on HAL open archive server: https://hal.science/hal-01531277v2
    as

    Download full text from publisher

    File URL: https://hal.science/hal-01531277v2/document
    Download Restriction: no
    File URL: https://libkey.io/10.13140/RG.2.2.29940.76162?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jack Ochs & John Duffy, 1999. "Emergence of Money as a Medium of Exchange: An Experimental Study," American Economic Review, American Economic Association, vol. 89(4), pages 847-877, September.
    2. Costas Lapavitsas, 2005. "The Emergence of Money in Commodity Exchange, or Money as Monopolist of the Ability to Buy," Review of Political Economy, Taylor & Francis Journals, vol. 17(4), pages 549-569.
    3. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-131, March.
    4. 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.
    5. Jones, Robert A, 1976. "The Origin and Development of Media of Exchange," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 757-775, August.
    6. Dowd, Kevin & Greenaway, David, 1993. "Currency Competition, Network Externalities and Switching Costs: Towards an Alternative View of Optimum Currency Areas," Economic Journal, Royal Economic Society, vol. 103(420), pages 1180-1189, September.
    7. R. Donangelo & K. Sneppen, 1999. "Self-organization of value and demand," Papers cond-mat/9906298, arXiv.org, revised Apr 2000.
    8. Larralde, Hernn & Stehl, Juliette & Jensen, Pablo, 2009. "Analytical solution of a multi-dimensional Hotelling model with quadratic transportation costs," Regional Science and Urban Economics, Elsevier, vol. 39(3), pages 343-349, May.
    9. Donangelo, R & Sneppen, K, 2000. "Self-organization of value and demand," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 276(3), pages 572-580.
    10. Sethi, Rajiv, 1996. "Evolutionary stability and social norms," Journal of Economic Behavior & Organization, Elsevier, vol. 29(1), pages 113-140, January.
    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. Lamarche-Perrin, Alex & Orléan, André & Jensen, Pablo, 2018. "Coexistence of several currencies in presence of increasing returns to adoption," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 496(C), pages 612-619.
    2. Alex Lamarche-Perrin & Andr'e Orl'ean & Pablo Jensen, 2018. "Coexistence of several currencies in presence of increasing returns to adoption," Papers 1801.04218, arXiv.org.
    3. Alex Lamarche-Perrin & André Orléan & Pablo Jensen, 2018. "Coexistence of several currencies in presence of increasing returns to adoption," Post-Print hal-01531277, HAL.
    4. E. Samanidou & E. Zschischang & D. Stauffer & T. Lux, 2001. "Microscopic Models of Financial Markets," Papers cond-mat/0110354, arXiv.org.
    5. E. Samanidou & E. Zschischang & D. Stauffer & T. Lux, 2007. "Agent-based Models of Financial Markets," Papers physics/0701140, arXiv.org.
    6. George Selgin, 2003. "Adaptive Learning and the Transition to Fiat Money," Economic Journal, Royal Economic Society, vol. 113(484), pages 147-165, January.
    7. Kiyotaki, Nobuhiro & Lagos, Ricardo & Wright, Randall, 2016. "Introduction to the symposium issue on money and liquidity," Journal of Economic Theory, Elsevier, vol. 164(C), pages 1-9.
    8. Howitt, Peter & Clower, Robert, 2000. "The emergence of economic organization," Journal of Economic Behavior & Organization, Elsevier, vol. 41(1), pages 55-84, January.
    9. Geoffrey Hodgson, 2002. "The Evolution of Institutions: An Agenda for Future Theoretical Research," Constitutional Political Economy, Springer, vol. 13(2), pages 111-127, June.
    10. Mikael Stenkula, 2003. "Carl Menger and the network theory of money," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 10(4), pages 587-606.
    11. Lefebvre, Germain & Nioche, Aurélien & Bourgeois-Gironde, Sacha & Palminteri, Stefano, 2018. "An Empirical Investigation of the Emergence of Money: Contrasting Temporal Difference and Opportunity Cost Reinforcement Learning," MPRA Paper 85586, University Library of Munich, Germany.
    12. Aurélien Nioche & Basile Garcia & Germain Lefebvre & Thomas Boraud & Nicolas P. Rougier & Sacha Bourgeois-Gironde, 2019. "Coordination over a unique medium of exchange under information scarcity," Palgrave Communications, Palgrave Macmillan, vol. 5(1), pages 1-11, December.
    13. Alexander W. Salter & William J. Luther, 2014. "Synthesizing State and Spontaneous Order Theories of Money," Advances in Austrian Economics, in: Entangled Political Economy, volume 18, pages 161-178, Emerald Group Publishing Limited.
    14. Jose Noguera, 2001. "The Appearance of Carriers and the Origins of Money," CERGE-EI Working Papers wp169, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    15. Rajeev, Meenakshi, 2012. "Search cost, trading strategies and optimal market structure," Economic Modelling, Elsevier, vol. 29(5), pages 1757-1765.
    16. Geoffrey M. Hodgson & Thorbjørn Knudsen, 2008. "The Complex Evolution of a Simple Traffic Convention: the Functions and Implications of Habit," International Economic Association Series, in: János Kornai & László Mátyás & Gérard Roland (ed.), Institutional Change and Economic Behaviour, chapter 9, pages 178-199, Palgrave Macmillan.
    17. Meissner, Christopher M. & Oomes, Nienke, 2009. "Why do countries peg the way they peg? The determinants of anchor currency choice," Journal of International Money and Finance, Elsevier, vol. 28(3), pages 522-547, April.
    18. Peter Rupert & Martin Schindler & Andrei Shevchenko & Randall Wright, 2000. "The search-theoretic approach to monetary economics: a primer," Economic Review, Federal Reserve Bank of Cleveland, issue Q IV, pages 10-28.
    19. Kevin D. Hoover, 2016. "The Crisis in Economic Theory: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 54(4), pages 1350-1361, December.
    20. Berentsen, Aleksander & McBride, Michael & Rocheteau, Guillaume, 2017. "Limelight on dark markets: Theory and experimental evidence on liquidity and information," Journal of Economic Dynamics and Control, Elsevier, vol. 75(C), pages 70-90.

    More about this item

    Statistics

    Access and download statistics

    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:hal:pseptp:hal-01531277. 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: Caroline Bauer (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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.