One way to think about the popularization of bitcoin and other cryptocurrencies is as a reduction...
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One way to think about the popularization of bitcoin and other cryptocurrencies is as a reduction in transaction costs for certain types of transactions. For this problem, ignore the energy requirements of maintaining a cryptocurrency system, and focus on the effect it has on peoples' ability to transact. (a) Give an example of a transaction between two people that does not impose any externalities. What effect would you expect the emergence of cryptocurrency to have on efficiency if most transactions using cryptocurrencies do not involve any externalities? Why? (b) Give an example of a transaction between two people that imposes a positive externality on others. What effect would you expect the emergence of cryptocurrency to have on efficiency if most transactions using cryptocurrencies imposed positive externalities? (c) Give an example of a transaction between two people that imposes a negative externality on others. What effect would you expect the emergence of cryptocurrency to have on efficiency if most transactions using cryptocurrencies imposed positive externalities? One way to think about the popularization of bitcoin and other cryptocurrencies is as a reduction in transaction costs for certain types of transactions. For this problem, ignore the energy requirements of maintaining a cryptocurrency system, and focus on the effect it has on peoples' ability to transact. (a) Give an example of a transaction between two people that does not impose any externalities. What effect would you expect the emergence of cryptocurrency to have on efficiency if most transactions using cryptocurrencies do not involve any externalities? Why? (b) Give an example of a transaction between two people that imposes a positive externality on others. What effect would you expect the emergence of cryptocurrency to have on efficiency if most transactions using cryptocurrencies imposed positive externalities? (c) Give an example of a transaction between two people that imposes a negative externality on others. What effect would you expect the emergence of cryptocurrency to have on efficiency if most transactions using cryptocurrencies imposed positive externalities?
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Answer Explanation a Example without externalities i Alice sells a digital artwork to Bob using cryp... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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