Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296456 
Authors: 
Year of Publication: 
2024
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 19 [Issue:] 1 [Year:] 2024 [Pages:] 131-167
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
We develop a monetary model in which a private company issues digital currency and uses payment data to estimate consumers' preferences. Sellers purchase preference information to produce goods that better match consumers' preferences. A monopoly arises in the digital currency industry, and digital currency is not issued if the inflation rate is sufficiently high. Due to reinforcing interactions between the value of preference information and trade volume, multiple equilibria (with and without digital currency) can exist depending on market structures for monetary exchanges. When left to market forces alone, socially efficient uses of payment data may not occur.
Subjects: 
Digital currency
preference information
privacy
strategic complementarities
transaction data
JEL: 
E12
E40
E50
G10
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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