I’m using the transaction costs framework for modeling non-cashless economy, as in SGU (2002), in which HHs need money since it reduces transaction costs from budget constraint, which enter like vat tax:
Now, I was wondering if this frame work maybe could be extended to the firms side, i.e. that firms somehow also face transaction costs and they demand money for reducing them. I’m not sure if there are examples of this but would be thankful if you know some, share them. It occurs to me something like if the firm wants to get its inputs, it needs to face such TC, but well not sure how to properly include it. Also the same authors have a kind of similar paper (2004), in which they include money demand from firms side but by inducing a CIA constraint to them.