The authors prove that the higher the ratio of consumption value to service value, the more suitable is the durable commodity to be money. Let us add that a typical durable commodity has both some consumption value (utility yielded at a point of consumption when it ``disappears as a smoke) and some service value (utility yielded on an account of its beauty (gold, jewelery) without getting dissipated. Next they show that if there is enough tobacco-like money at the beginning, then the equilibrium is efficient, under the assumption of a diminishing marginal utility to consuming tobacco, and that the marginal utility of tobacco is bounded from below. It is also demonstrated that if money is gold-like, then for every generic \(u\in U\) the allocation yield by \(u\) is not efficient.
- The demonetization of gold: transactions and the change in control
- Commodity money in the presence of goods of heterogeneous quality
- Gold, liquidity and secured loans in a multistage economy. I: Gold as money
- Endogenizing the provision of money: costs of commodity and fiat monies in relation to the value of trade
- Monetary general equilibrium with transaction costs.
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