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Open Access Publications from the University of California

Mengerian Saleableness and Commodity Money in a Walrasian Trading Post Example

  • Author(s): Starr, Ross M.
  • et al.

In an economy with commodity-pairwise trading posts and transaction costs, commodity money is endogenously determined in general equilibrium. Absent double coincidence of wants, the low-transaction cost commodity (with the narrowest proportional bid/ask price spread) becomes the common medium of exchange.

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