We show that an intrinsic property of a large class of rational bubbles is their capacity to relax the agents’ debt limits. Any bubble that preserves the set of pricing kernels, or equivalently, the asset span, has effectively an identical effect on consumption and real interest rates as an...

We analyze the limit behavior of sequences of oligopolistic equilibria in which firms follow objectives consistent with their shareholders’ interests. We show that convergence to a competitive outcome may fail for some distributions of firms’ shares across consumers and provide a...