In decentralized trade individuals self-insure against consumption risk via costly diversification of skills. Although money acts as consumption insurance, it may lead to a moral hazard problem. If the problem is severe, monetizing trade can lower welfare relative to barter.
Camera, G., Reed, R.R.*, Waller, C.J. (2005). Can monetizing trade lower welfare? An example. ECONOMICS LETTERS, 81(2), 33-40 [10.1016/S0165-1765(03)00168-X].
Can monetizing trade lower welfare? An example
Camera, Gabriele;
2005
Abstract
In decentralized trade individuals self-insure against consumption risk via costly diversification of skills. Although money acts as consumption insurance, it may lead to a moral hazard problem. If the problem is severe, monetizing trade can lower welfare relative to barter.File in questo prodotto:
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