In this research we introduce a network effect model to identify the condition under which a parallel invoicing in different currencies would be possible. It also includes a simulation designed to illustrate the dynamics of the currency choice of oil invoicing. The results show that a stable equilibrium of parallel oil invoicing in two currencies can arise if (1) none-network effect costs, such as political or social conditions have a moderate impact on oil market players; (2) transaction costs are low (3) a sufficiently high share of Euro invoicing is expected and finally (4) information costs are either low or declined quickly with increasing use of Euro.
Mehrara, M., Jabalameli, F. J., & Barati, M. (2010). Investigation of Replacing the Oil’s Revenues from Dollar to Euro. The Journal of Economic Policy, 2(4), 105-133.
MLA
Mohsen Mehrara; Farkhondeh Jabalameli Jabalameli; Mehdi Barati. "Investigation of Replacing the Oil’s Revenues from Dollar to Euro". The Journal of Economic Policy, 2, 4, 2010, 105-133.
HARVARD
Mehrara, M., Jabalameli, F. J., Barati, M. (2010). 'Investigation of Replacing the Oil’s Revenues from Dollar to Euro', The Journal of Economic Policy, 2(4), pp. 105-133.
VANCOUVER
Mehrara, M., Jabalameli, F. J., Barati, M. Investigation of Replacing the Oil’s Revenues from Dollar to Euro. The Journal of Economic Policy, 2010; 2(4): 105-133.
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