The model contains light and heavy coins, imperfect information, and prices determined via bilateral bargaining. There are equilibria with neither, both, or only one type of coin in circulation. When both circulate, coins may trade by weight or by tale. We discuss the extent to which Gresham s Law holds in the various cases. Following a debasement, the quantity of reminting depends on the incentives offered by the sovereign.
Equilibria exist with positive seigniorage and a mixture of old and new coins in circulation.