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This paper studies the choice of payment instruments in a simple model where both money and credit can be used as means of payment. We endogenize the acceptability of credit by allowing retailers to invest in a costly record-keeping technology. Our framework captures the two-sided market interaction between consumers and retailers, leading to strategic(More)
We develop a model of commodity money with uncertainty concerning the quality of coins and study the role played by a coin inspection and certi…cation technology in improving monetary circulation and welfare. We show that this technology reduces the extent of circulation by weight (or Gresham's law) to situations in which information on coins is good and(More)
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