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Payments network in a search model of money

Author

Listed:
  • Antoine Martin

    (Research and Statistics Federal Reserve Bank of New York)

  • Michael Orlando
  • David Skeie

Abstract

In a simple search model of money, we study a special kind of memory which gives rise to an arrangement resembling a payment network. Specifically, we assume that agents can choose to have access to a central data base which keeps track of payments made and received. We show that multiple equilibria can arise because of a network effect and we study policies that can help eliminate the equilibrium with low access. We also study policies that can loosen the participation constraint. Finally, we compare our model with the model of Cavalcanti and Wallace (1999 a and b)

Suggested Citation

  • Antoine Martin & Michael Orlando & David Skeie, 2006. "Payments network in a search model of money," 2006 Meeting Papers 580, Society for Economic Dynamics.
    • Handle: RePEc:red:sed006:580
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    Cited by:

    1. is not listed on IDEAS
    2. Lai, Kuei-Kuei & Chen, Yu-Long & Kumar, Vimal & Daim, Tugrul & Verma, Pratima & Kao, Fang-Chen & Liu, Ruirong, 2023. "Mapping technological trajectories and exploring knowledge sources: A case study of E-payment technologies," Technological Forecasting and Social Change, Elsevier, vol. 186(PB).
    3. Kahn, Charles M. & Roberds, William, 2008. "Credit and identity theft," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 251-264, March.
    4. Monnet, Cyril & Roberds, William, 2008. "Optimal pricing of payment services," Journal of Monetary Economics, Elsevier, vol. 55(8), pages 1428-1440, November.
    5. Cyril Monnet & William Roberds, 2006. "Credit and the no-surcharge rule," FRB Atlanta Working Paper 2006-25, Federal Reserve Bank of Atlanta.
    6. Cyril Monnet & William Roberds, 2007. "Optimal pricing of payment services when cash is an alternative," Working Papers 07-26, Federal Reserve Bank of Philadelphia.
    7. Jonathan Chiu & Tsz-Nga Wong, 2014. "E-Money: Efficiency, Stability and Optimal Policy," Staff Working Papers 14-16, Bank of Canada.
    8. Kahn, Charles M. & Roberds, William, 2009. "Why pay? An introduction to payments economics," Journal of Financial Intermediation, Elsevier, vol. 18(1), pages 1-23, January.
    9. Roberds, William & Schreft, Stacey L., 2009. "Data breaches and identity theft," Journal of Monetary Economics, Elsevier, vol. 56(7), pages 918-929, October.

    More about this item

    Keywords

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    JEL classification:

    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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