Trade Using One Commodity as a Means of Payment

by Lloyd S. Shapley, Martin Shubik

Download

Full Document

FormatFile SizeNotes
PDF file 2.2 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

Purchase

Purchase Print Copy

 FormatList Price Price
Add to Cart Paperback65 pages $20.00 $16.00 20% Web Discount

A general model of noncooperative trading equilibrium is described, in which prices depend in a natural way on the buying and selling decisions of the traders, and which therefore avoids the classical equilibrium assumption that individuals must regard prices as fixed. The key to our approach is the use of a single, specified commodity as money or "cash." We include the possibility that this commodity is valueless, in and of itself, and serves only as a fiat money. The model is treated as a noncooperative game, in the spirit of Nash and Cournot. But the rules of the game, including the forming of prices, are independent of any equilibrium assumptions, which enter only in connection with possible solutions of the game. A number of variant formulations are considered briefly. The exposition is largely diagrammatic, with mathematical proofs to appear in another report.

This report is part of the RAND Corporation Report series. The report was a product of the RAND Corporation from 1948 to 1993 that represented the principal publication documenting and transmitting RAND's major research findings and final research.

Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.