@article{e643e00a632f464fbfe5b39a753be742,
title = "Standard Securities",
abstract = "The cost of gathering information about unfamiliar securities may lead to gains from standardization; firms issue a particular security because it is used by other firms. To support standardization as an equilibrium phenomenon, information must be non-transferable (otherwise it might be revealed by prices or the observation of other agents{\textquoteright} decisions) and it must be generic (useful in evaluating a number of securities). A competitive equilibrium in which standard contracts are used may be subject to coordination failure: while there always exists a constrained efficient equilibrium, there may also exist Pareto-ranked equilibria.",
author = "Douglas Gale",
note = "Funding Information: Then it is clear by inspection that there exists a value of C that simultaneously satisfies inequalities (1) and (2). Thiscompletesthedemonstrationthattheeconomyhastwoequilibria. Byconstruction,thefirstequilibrium dominates the second. In fact, these equilibria are Pareto-ranked ex post, that is, after agents know their types. II Acknowledgement. An earlier version of this paper was presented at the Sloan School and the London School of Economics. I am grateful for the comments of the seminar participants. I also received helpful advice from Franklin Allen and David Hirshleifer on empirical matters. John Moore and two anonymous referees made helpful suggestions on the exposition of the paper. Financial support from the NSF under grant no. SES 8720589 is gratefully acknowledged.",
year = "1992",
month = sep,
doi = "10.2307/2297995",
language = "English (US)",
volume = "59",
pages = "731--755",
journal = "Review of Economic Studies",
issn = "0034-6527",
publisher = "Oxford University Press",
number = "4",
}