Abstract

http://ssrn.com/abstract=2396183
 
 

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Restricting the Means of Exchange within Organizations


Lars Stole


University of Chicago - Booth School of Business

Canice Prendergast


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

February 14, 2014

European Economic Review, Vol. 43, 1999

Abstract:     
This paper considers why firms often ban monetary exchange between their employees, while encouraging these trades through other means, such as through the reciprocation of favours or barter. Despite classical inefficiencies associated with non-monetary exchange, we illustrate two themes as to why non-monetary trade may be preferred to allowing money. First, the use of non-monetary trade may affect the allocation of rents in surplus-enhancing ways, as agents respond strategically to the existence of these rents. Second, non-monetary trade improves the ability of agents to impose sanctions on those who act dishonestly.

Keywords: Non-monetary exchange, Rent seeking, Surplus enhancing sanctions

JEL Classification: D21, L23

Accepted Paper Series





Not Available For Download

Date posted: February 16, 2014  

Suggested Citation

Stole, Lars and Prendergast, Canice, Restricting the Means of Exchange within Organizations (February 14, 2014). European Economic Review, Vol. 43, 1999. Available at SSRN: http://ssrn.com/abstract=2396183

Contact Information

Lars A. Stole (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7309 (Phone)
773-702-0458 (Fax)
Canice Prendergast
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7309 (Phone)
773-702-0458 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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