This paper studies the effects of the joint distribution of the stock financial expertise and financial wealth on asset prices. By modeling financial expertise as a stock, we are able to incorporate economic ideas from capital theory as well as industrial organization into a model with slow...

We develop a dynamic equilibrium model of complex asset markets with endogenous entry and exit in which the investment technology of investors with more expertise is subject to less asset-specific risk. The joint equilibrium distribution of financial expertise and wealth then determines risk...