A pairwise trading process is formulated subject to conditions of nonnegativity of traders' holdings and quid pro quo. It is shown that that: (i) There is a centralized procedure that achieves the equilibrium allocation for an arbitrary economy. (ii) It is not in general possible to find a...

The transaction role of money is one of the most palpable of economic phenomena and offers one of the first challenges for the theory of exchange. A useful analogy can be made between the role of money as a record-keeping device and the theory of signaling. The chapter discusses that the theory...