De facto TPSer Thomas Johnson sends along this story about mackerel as currency in prisons from the Wall Street Journal. Everyone knows how cigarettes widely played this role for a long time-- The Shawshank Redemption even notes this-- but federal prisons banned smoking in 2004 and, with it, so went the cigarette as the spontaneously agreed-upon unit of currency.
It really fits the requirements for a good unit of currency. You can't debase the mackerel; it comes in pouches. It's small and easy to store and transport. You don't want to consume it.
The prisons are trying to keep the markets from existing; my guess is the markets are operating best where wardens have no idea they exist.
I'd presume there is some variation in what is allowed in some prisons and not in others-- the article notes that federal prisons banned smoking, maybe some state level ones don't. Could an exchange rate between mackerel and cigarettes and whatever else is used in other prisons be established? I'd love to see that. That's a great paper.
Here's another: Shocks to the mackerel system and the effect on prices in prisons? You could do shocks to mackerel substitutes as well, though in one of my favorite lines from the article:
"[Mackerel] never has done very well at all, regardless of the retailer, but it's very popular in the prisons."