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Download the Paper (219 K, PDF file) - December 21, 2007 Tell a colleague about it. Printing Tips: Select 'print as image' in the Acrobat print dialog if you have trouble printing.

ABSTRACT:
Existence and efficiency of general equilibrium with commodity money is investigated in an economy where N commodities are traded at N(N-1)/2 commodity-pairwise trading posts. Trade is a resource-using activity recovering transaction costs through the spread between bid (wholesale) and ask (retail) prices. Budget constraints, enforced at each trading post separately, imply demand for a carrier of value between trading posts. Existence of general equilibrium is established under conventional convexity and continuity conditions while structuring the price space to account for distinct bid and ask price ratios. Commodity money flows are identified as the difference between gross and net inter-post trades.

SUGGESTED CITATION:
Ross M. Starr, "Commodity Money Equilibrium in a Convex Trading Post Economy with Transaction Costs" (December 21, 2007). Department of Economics, UCSD. Paper 2005-07R4.
http://repositories.cdlib.org/ucsdecon/2005-07R4