We consider economies with incomplete markets, one good per state, private ownership of initial endowments, a single firm, and no assets other than shares in this firm. In this simple framework, arbitrarily small income effects can render every market equilibrium resulting from some production...

A classic characterization of competitive equilibria views them as feasible allocations maximizing a weighted sum of utilities. It has been applied to establish fundamental properties of the equilibrium notion, such as existence, determinacy, and computability. However, it fails for economies...

We introduce a methodology for analysing infinite horizon economies with two agents, one good, and incomplete markets. We provide an example in which an agent's equilibrium consumption is zero eventually with probability one even if she has correct beliefs and is marginally more patient. We then...

This paper argues that the introduction of a short-sale constraint in the Arrow-Radner frameworkinvalidates standard definitions of complete and incomplete markets. In this constrained set-up,two threshold values with familiar properties arise.The case of a zero short-sale bound set on some...

The purpose of this paper is to explore how the concept of a Drèze equilibrium can be extended to multiperiod production economies with incomplete markets. Constrained efficiency cannot serve as a basis for such an extension because multiperiod models tend to violate even weak constrained...

In the present paper we study the efficiency properties of competitive equilibria in economies with hidden action and multiple goods. We borrow the description of the economy from Lisboa [3] and we apply a method of proof close in spirit to the one used in the literature on incomplete financial...

In this paper we use global analysis to study the welfare properties of general equilibrium economies with incomplete markets (GEI). Our main result is to show that constrained Pareto optimal equilibria are contained in a submanifold of the equilibrium set. This result is explicitly derived for...

A new measure of constrained efficiency for application in economies with incomplete markets is presented. This measure — termed Allais-Malinvaud efficiency — can be viewed as adjusting for market incompleteness not fully captured in previous work. It is shown that equilibrium allocations in...

In this paper, I construct a model of an exchange economy in which bankruptcy arises in a manner similar to what we observe. This model is a more realistic representation of some markets in which intertemporal assets are traded. Using standard and natural assumptions, I show that every economy...

Incomplete markets in overlapping generations leave room for Pareto improvement. We analyze a model with two goods and idiosyncratic shocks. We compare market equilibrium with the constrained efficient equilibrium allocation and demonstrate that, when shocks are symmetric and do not affect all...