CFDP 903

The Transactions Cost of Money (A Strategic Game Analysis)


Publication Date: March 1989

Pages: 24


The payments system of a modern economy is a peculiar mix of technological and institutional factors. Trade takes time and involves some form of money or credit. Going to the bank or arranging credits is expensive. Baumol (1952) and Tobin (1956) address the costs of transactions. However both the Baumol and the Tobin analysis was carried out in a partial equilibrium context. Here we address the task of considering the costs of banking in a closed strategic market game.


Strategic game, exchange economy, transaction costs

JEL Classification Codes: 021, 022, 213

See CFP: 789