Markets and contracts

A. Bisin, J. D. Geanakoplos, P. Gottardi, E. Minelli, H. Polemarchakis

    Research output: Contribution to journalArticlepeer-review

    Abstract

    Economies with asymmetric information are encompassed by an extension of the model of general competitive equilibrium that does not require an explicit modeling of private information. Sellers have discretion over deliveries on contracts; this is in common with economies with default, incomplete contracts or price rigidities. Competitive equilibria exist and anonymous markets are viable. But, for a generic economy, competitive equilibrium allocations are constrained suboptimal: there exist Pareto improving interventions via linear, anonymous taxes.

    Original languageEnglish (US)
    Pages (from-to)279-288
    Number of pages10
    JournalJournal of Mathematical Economics
    Volume47
    Issue number3
    DOIs
    StatePublished - May 2011

    Keywords

    • Asymmetric information
    • Competitive markets
    • Equilibrium

    ASJC Scopus subject areas

    • Economics and Econometrics
    • Applied Mathematics

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