In a three-period finite competitive exchange economy with incomplete financial markets and retrading, we show the generic existence of financial innovation which decreases equilibrium price volatility (as well as innovation which increases it). The existence is obtained under conditions of...

In this paper, the authors study the possibility of controlling asset price volatility through financial innovation in a three-period finite competitive exchange economy with incomplete financial markets and retrading.

This paper studies corporate control in a general equilibrium model with incomplete markets. At the market equilibrium, shareholders typically disagree on the way to evaluate production plans outside the market span. Hence a collective decision mechanism is needed to resolve this conflict. A...

An economy with two dates is considered, on state at the first date and a finite number of states at the last date. Shareholders determine production plans b voting -one share, one vote- and at r-majority stable equilibria, alternative production plans are supported by at most rx100 percent of...

This article provides a study of corporate control in a general equilibrium framework for production economies. When markets are incomplete, trading assets does not allow agents to fully resolve their conflict of interest: at the market equilibrium, shareholders disagree on the way to evaluate...

We prove existence of equilibria with proportional transaction costs on asset trading, using homotopy methods.

In a simple parametric general equilibrium model with S states of nature and K < S firms - and thus potentially incomplete markets-, rates of super majority rule p€[1/2, 1] are computed which guarantee the existence of p -majority stable production equilibria : within each firm, no alternative production plan can rally a proportion bigger than p of the shareholders, or shares (depending on the governance), against the equilibrium. The smallest p are obtained for announced production plans whose span contains the ideal consumptions of all K mean shareholders. This is done under various governances. These rates of super majority are shown to be always smaller than Caplin and Nalebuff (1988, 1991) bound of 1-1/e ~ 0.64. Moreover, simple majority production equilibria are shown to exist for any initial distribution of types when K=S-1, and for symmetric distributions of types as soon as K > S/2. Finally, through parametric examples, these rates are shown to decrease with the homogeneity of the shareholders' beliefs on the probabilities of the states of nature, and to increase with the shareholders'...</s>

The competitive equilibrium correspondence, which associates equilibrium prices of commodities and assets with allocations of endowments, identifies the preferences and beliefs of individuals under uncertainty; this is the case even if the asset market is incomplete.

Extrinsic uncertainty is effective at a competitive equilibrium. This is generically the case if commodities are exchanged indirectly, through the exchange of assets, spot markets are inoperative, while the asset market is incomplete. <p> The structure of payoffs of assets may allow for non -...</p>

When the asset market is incomplete, there typically exist taxes on trades in assets and a redistribution of revenue in the asset market that are Pareto improving. <p> The policy is anonymous, it economizes on complexity, and it results in ex post Pareto optimal allocations, it is publicly...</p>