COWLES FOUNDATION FOR RESEARCH IN
ECONOMICS Box 208281
COWLES FOUNDATION DISCUSSION PAPER NO. 1043 A Strategic Market Game with Seigniorage Costs of Fiat Money Martin Shubik and D. P. Tsomocos March 1993 A model that includes the cost of producing money is presented and the nature of the
inefficient equilibria in the model are examined. It is suggested that if one acknowledges
that transactions are a form of production, which requires the consumption resources, then
the concept of Pareto optimality is inappropriate for assessing efficiency. Instead it
becomes necessary to provide an appropriate comparative analysis of alternative
transactions mechanisms in the appropriate context. |
