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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