Communal Responsibility and the Coexistence of Money and Credit under Anonymous Matching

Arbeitspapier

Communal responsibility, a medieval institution studied by Greif (2006), supported the use of credit among European merchants in the absence of modern enforcement technologies. This paper shows how this mechanism helps to overcome enforcement problems in anonymous buyer/seller transactions. In a village economy version of the Lagos and Wright (2005) model, agents trading anonymously in decentralized markets can be identified by their citizenship and thus be held liable for each other. Enforceability within each village's centralized afternoon market ensures collateralization of credit in decentralized markets. In the resulting equilibrium, money and credit coexist in decentralized markets if the use of credit is costly. Our analysis easily extends itself to other payment systems like credit cards that provide a group identity to otherwise anonymous agents.

Objekt anzeigen

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: EHES Working Papers in Economic History ; No. 6

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Demand for Money ; Exchange and Production Economies
• Thema: Communal responsibility ; anonymous matching ; money demand ; credit ; bills of exchange

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Boerner, Lars ; Ritschl, Albrecht
• Ereignis: Veröffentlichung
• (wer): European Historical Economics Society (EHES)
• (wo): s.l.
• (wann): 2011

Weitere Informationen

• Handle: http://hdl.handle.net/10419/246937