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Redeemable Platform Currencies

Author

Listed:
  • Kenneth Rogoff
  • Yang Yous

Abstract

Can massive online retailers such as Amazon and Alibaba issue digital tokens that potentially compete with bank debit accounts? There is a long history of trading stamps and loyalty points, but new technologies are poised to sharply raise the significance of redeemable assets as a store of value. Here, we develop a simple stylized model of redeemable tokens that can be used to study sales and pricing strategies for issuing tokens, including ICOs. Our central finding is that platforms can potentially earn higher revenues by making tokens non-tradable unless they can generate a sufficiently high outside-platform convenience yield.

Suggested Citation

  • Kenneth Rogoff & Yang Yous, 2023. "Redeemable Platform Currencies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(2), pages 975-1008.
    • Handle: RePEc:oup:restud:v:90:y:2023:i:2:p:975-1008.
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    File URL: http://hdl.handle.net/10.1093/restud/rdac028
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    Cited by:

    1. Carletti, Elena & Claessens, Stijn & Fatás, Antonio & Vives, Xavier (ed.), 2020. "Barcelona Report 2 - The Bank Business Model in the Post-Covid-19 World," Vox eBooks, Centre for Economic Policy Research, number p329.
    2. Chiu, Jonathan & Wong, Tsz-Nga, 2022. "Payments on digital platforms: Resiliency, interoperability and welfare," Journal of Economic Dynamics and Control, Elsevier, vol. 142(C).
    3. Shah, Anand, 2022. "Valuation of Loyalty Tokens," MPRA Paper 111986, University Library of Munich, Germany.
    4. Zhixiu Yu, 2023. "On the Coexistence of Cryptocurrency and Fiat Money," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 49, pages 147-180, July.

    More about this item

    Keywords

    Digital currencies; Platforms; Tokens; Initial coin offering;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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