Cigarette Money

  title={Cigarette Money},
  author={Kenneth Burdett and Alberto Trejos and Randall Wright},
  journal={J. Econ. Theory},
We study the circumstances under which commodities emerge endogenously as media of exchange – the way cigarettes apparently did, for example, in POW camps – both when there is money available and when there is not. We characterize how specialization, the degree of trading frictions, intrinsic properties of commodities, and the amount of money available determine whether a commodity serves as money and its exchange value. In some equilibria, the exchange value of commodity money is… 

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