Why pay? An introduction to payments economics

This paper surveys the growing literature oil payments. We begin by presenting a simple model that illustrates the essential function of payments and how this may be implemented through various arrangements. We show flow the basic models of payments have been used to address a variety of microeconomic and macroeconomic policy issues. We then discuss the links between payments economics and other fields, including monetary theory, corporate finance, and industrial organization. We conclude with all overview of the empirical literature and directions for future research. (C) 2008 Elsevier Inc. All rights reserved.