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A simplistic model of the emergence of money

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Listed:
  • Alex Lamarche-Perrin

    (Phys-ENS - Laboratoire de Physique de l'ENS Lyon - ENS de Lyon - École normale supérieure de Lyon - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

  • André Orléan

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Pablo Jensen

    (Phys-ENS - Laboratoire de Physique de l'ENS Lyon - ENS de Lyon - École normale supérieure de Lyon - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

Abstract

We present a simplistic model of the competition between dierent currencies. Each individual is free to choose the currency that minimizes his transaction costs, which arise whenever his exchanging relations have chosen a dierent currency. We show that competition between currencies does not necessarily converge to the emergence of a single currency. For large systems, we prove that two distinct communities using dier-ent currencies in the initial state will remain forever in this fractionalized state.

Suggested Citation

  • Alex Lamarche-Perrin & André Orléan & Pablo Jensen, 2017. "A simplistic model of the emergence of money," Working Papers halshs-01531274, HAL.
    • Handle: RePEc:hal:wpaper:halshs-01531274
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01531274
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    References listed on IDEAS

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    1. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-131, March.
    2. Larralde, Hernn & Stehl, Juliette & Jensen, Pablo, 2009. "Analytical solution of a multi-dimensional Hotelling model with quadratic transportation costs," Regional Science and Urban Economics, Elsevier, vol. 39(3), pages 343-349, May.
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    Keywords

    money; dynamics; increasing returns;
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