I construct and analyze an example of an economy with production and money under conditions of uncertainty, asymmetric information, and an incomplete asset market. For alternative scenarios, which differ in the information available to consumers and firms, I compute the equilibrium prices and...

I construct and analyse an example of an economy with production and money under conditions of uncertainty, assymetric information, and an incomplete asset market. For alternative scenarios, which differ in the information available to consumers and firms, I compute the equilibrium prices and...

The coordinating role of a redundant security is its role in markets with transaction costs to coordinate different consumers’ security demands so as to clear all security markets and, simultaneously, attain a given commodity allocation. The purpose of this paper is to prove that, under some...

The present note highlights the seminal contributions of Diamond, Drèze and Radner towards the integration of financial markets into general equilibrium modeling.

Extrinsic uncertainty is effective at a competitive equilibrium. This is generic if spot markets are inoperative: the only objects of exchange are assets for the contingent delivery of commodities; and the asset market is incomplete. The structure of payoffs of assets may allow for non-trivial...

In a incomplete asset market, firms compute the value of production plans by approximating them with the payoffs of portfolios of marketed assets; equivalently, by projecting their payoffs on the span of the payoffs of marketed assets; equivalently, they apply the capital asset pricing model.

Profit maximization is not a well defined objective when markets are incomplete. Several criteria of investment choice have therefore been put forward in the literature, some of which crucially hinge upon aggregation of shareholders' preferences, as is the case with the criteria proposed by...