The separation of a unit of account (UoA) from a medium of exchange (MoE) in the commodity-money system is investigated by considering explicitly a seller¡¯s choice with regard to posting price in terms of either an MoE or a UoA. If the likelihood of debasement of MoE or its rate is high...

Using a standard Ramsey approach, we examine an optimal allocation of the social cost for electronic payment system in the context of a dynamic general equilibrium model where money is essential. The benevolent government provides electronic payment services and allocates the relevant social...

This paper incorporates the recognizability of assets explicitly into the standard search model of exchange to determine the liquidity returns as an equilibrium outcome. Assuming that money is universally recognizable but bond is not, the two types of the single-coincidence meetings arise?one...

Retailers in the Netherlands and the U.K. can charge different prices for a commodity depending on whether cash or a debit card is used as payment, whereas retailers in the U.S. generally cannot. These two types of economies with and without a uniform pricing constraint for cash and debit card...

The welfare cost of inflation is explored via a search-theoretic model in which along with non-interest-bearing cash, interest-bearing liquid and illiquid assets are available. With inflation, agents are willing to replace higher-return illiquid assets with lower return liquid assets for...

A simple monetary model is constructed to study the implications of an indexed unit of account (Indexed-UoA). In an economy with an Indexed-UoA, credit trade friction attributed to inflation is resolved and there is no redistributional effect from unexpected inflation between debtors and...

This paper offers a model to study competition and corruption with a principal-agent framework. We provide two key results on the optimal institutional design. First, in quality-only competition, corruption does no harm to the principal, but in quality-price competition, corruption negatively...

Signaling, in regard to its role of information transmission, has been well understood by existing literature, but its e¢´ect on the decision to invest in content has not been thoroughly studied. This paper analyzes a model of pre-investment and subsequent costly signaling to reconsider the...

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We modify the dynamic pivot mechanism of Bergemann and VAalimAaki (Econometrica, 2010) in such a way that lump-sum fees are collected from the players. We show that the modi?ed mechanism satis?es ex-ante budget balance as well as ex-post e¡¾ciency, periodic ex-post incentive compatibility, and...