... S50 Paulo Cambridge University Press The Edinburgh Building, Cambridge CB2 2RU, UK Published ... more ... S50 Paulo Cambridge University Press The Edinburgh Building, Cambridge CB2 2RU, UK Published in the United States of America by Cambridge ... link to gold, rather than the excesses of competition, that helped cause the Great Depression and the financial collapse that went ...
This paper attempts to account for the rising value of cryptocurrencies using basic concepts of m... more This paper attempts to account for the rising value of cryptocurrencies using basic concepts of monetary theory. A positive value of fiat money is itself problematic inasmuch as that value apparently depends entirely on its expected resale value. A current value entirely dependent on expected future resale value seems inconsistent with backward induction. While fiat money can avoid the backward-induction problem if it is made acceptable in payment of taxes, acceptability for tax payments is unavailable to cryptocurrencies. Is the rising value of bitcoin and other cryptocurrencies a bubble? The paper argues that network effects may be an alternative mechanism for avoiding the logic of backward induction. Because users of any good subject to substantial network effects incur costs by switching to an incompatible alternative to the good currently used, users of a bitcoin for certain transactions may be locked into continued use of bitcoin despite an expectation that its future value will eventually go to zero. Thus, even if bitcoin and other cryptocurrencies are bubble phenomena, network effects may lock existing users of bitcoin into continued use of bitcoin for those transactions for which bitcoins provide superior transactional services to those provided by conventional currencies. Nevertheless, the prospects for bitcoin’s expansion beyond its current niche uses are dim, because its architecture implies that a significant expansion in the demand for its transactional services would lead to rapid appreciation that is incompatible with service as a medium of exchange.
This review provides a brief summary description of the book and its eight chapters which review ... more This review provides a brief summary description of the book and its eight chapters which review the history of and the history of thought about seigniorage. After the first two introductory chapters, the next four chapters analyze the conditions for optimal seigniorage for three ideal types of currency (commodity, fiat, and credit) and for mixed systems of commodity and credit currencies and fiat and credit currencies. The final chapters discuss how the analysis might be extended to consider optimal seigniorage not in isolation but as part of an integrated fiscal system and how the place of the theory of seigniorage within monetary theory. Despite the valuable contribution Reich makes in providing a detailed overview of the literature on seigniorage and to the analysis of seigniorage, the review notes several topics on which Reich’s analysis of seigniorage is incomplete or insufficiently nuanced.
Despite all the commentary that the topic has attracted in recent years, confusion still surround... more Despite all the commentary that the topic has attracted in recent years, confusion still surrounds the proper definition of relevant markets in antitrust. This paper addresses that confusion and attempts to explain the underlying logic of market definition. It does so largely by way of exclusion. The paper identifies and explains three common errors in the way that courts and advocates approach market definition. The first error is what we call the natural market fallacy. This is the mistake of assuming that relevant markets are identifiable constructs and features of competition in the world, rather than the purely conceptual analytic devices that they actually are. The second error is what we call the independent market fallacy. This is the failure to appreciate that relevant markets do not exist independent of any theory of harm but must always be customized to reflect the specific details of a given theory of harm. The third error is what we call the single market fallacy. This is the tendency to seek some single, best relevant market, when in reality there will typically be many relevant markets that could be helpfully and appropriately drawn to aid in the analysis of a given case or investigation. In the course of identifying and debunking these fallacies, the paper clarifies the appropriate framework for understanding and conducting market definition.
... S50 Paulo Cambridge University Press The Edinburgh Building, Cambridge CB2 2RU, UK Published ... more ... S50 Paulo Cambridge University Press The Edinburgh Building, Cambridge CB2 2RU, UK Published in the United States of America by Cambridge ... link to gold, rather than the excesses of competition, that helped cause the Great Depression and the financial collapse that went ...
This paper attempts to account for the rising value of cryptocurrencies using basic concepts of m... more This paper attempts to account for the rising value of cryptocurrencies using basic concepts of monetary theory. A positive value of fiat money is itself problematic inasmuch as that value apparently depends entirely on its expected resale value. A current value entirely dependent on expected future resale value seems inconsistent with backward induction. While fiat money can avoid the backward-induction problem if it is made acceptable in payment of taxes, acceptability for tax payments is unavailable to cryptocurrencies. Is the rising value of bitcoin and other cryptocurrencies a bubble? The paper argues that network effects may be an alternative mechanism for avoiding the logic of backward induction. Because users of any good subject to substantial network effects incur costs by switching to an incompatible alternative to the good currently used, users of a bitcoin for certain transactions may be locked into continued use of bitcoin despite an expectation that its future value will eventually go to zero. Thus, even if bitcoin and other cryptocurrencies are bubble phenomena, network effects may lock existing users of bitcoin into continued use of bitcoin for those transactions for which bitcoins provide superior transactional services to those provided by conventional currencies. Nevertheless, the prospects for bitcoin’s expansion beyond its current niche uses are dim, because its architecture implies that a significant expansion in the demand for its transactional services would lead to rapid appreciation that is incompatible with service as a medium of exchange.
This review provides a brief summary description of the book and its eight chapters which review ... more This review provides a brief summary description of the book and its eight chapters which review the history of and the history of thought about seigniorage. After the first two introductory chapters, the next four chapters analyze the conditions for optimal seigniorage for three ideal types of currency (commodity, fiat, and credit) and for mixed systems of commodity and credit currencies and fiat and credit currencies. The final chapters discuss how the analysis might be extended to consider optimal seigniorage not in isolation but as part of an integrated fiscal system and how the place of the theory of seigniorage within monetary theory. Despite the valuable contribution Reich makes in providing a detailed overview of the literature on seigniorage and to the analysis of seigniorage, the review notes several topics on which Reich’s analysis of seigniorage is incomplete or insufficiently nuanced.
Despite all the commentary that the topic has attracted in recent years, confusion still surround... more Despite all the commentary that the topic has attracted in recent years, confusion still surrounds the proper definition of relevant markets in antitrust. This paper addresses that confusion and attempts to explain the underlying logic of market definition. It does so largely by way of exclusion. The paper identifies and explains three common errors in the way that courts and advocates approach market definition. The first error is what we call the natural market fallacy. This is the mistake of assuming that relevant markets are identifiable constructs and features of competition in the world, rather than the purely conceptual analytic devices that they actually are. The second error is what we call the independent market fallacy. This is the failure to appreciate that relevant markets do not exist independent of any theory of harm but must always be customized to reflect the specific details of a given theory of harm. The third error is what we call the single market fallacy. This is the tendency to seek some single, best relevant market, when in reality there will typically be many relevant markets that could be helpfully and appropriately drawn to aid in the analysis of a given case or investigation. In the course of identifying and debunking these fallacies, the paper clarifies the appropriate framework for understanding and conducting market definition.
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