The paper discusses a way in which price uncertainty may affect the extent of idiosyncratic, uninsurable risks in an incomplete markets economy with nominal assets and thereby affect output and welfare. Although the returns on these assets are constant and riskfree in nominal terms, price...

The present paper provides a simple and complete proof of the existence of a stationary monetary equilibrium for a stochastic overlapping generations model with a finite state space. Differently from previous studies, we show that all the prices are positive without the Frobenius theorem.

The paper argues that, from a dynamic efficiency perspective, intersections of factor price frontiers are irrelevant to the choice of techniques. Because every change in technique involves a temporary loss or gain in both profit and per capita consumption within the transition period, its...

We show that a rational expectations equilibrium need not be incentive compatible, need not be implementable as a perfect Bayesian equilibrium and may not be fully Pareto optimal, unless the utility functions are state independent. A comparison of rational expectations equilibria with core...

We extend the analysis of van Damme (1987, Section 7.5) of the famous smoothing demand in Nash (1953) as an argument for the singular stability of the symmetric Nash bargaining solution among all Pareto efficient equilibria of the Nash demand game. Van Damme's analysis provides a clean...

We show that a rational expectations equilibrium need not be incentive compatible, need not be implementable as a perfect Bayesian equilibrium and may not be fully Pareto optimal, unless the utility functions are state independent. A comparison of rational expectations equilibria with core...

Inefficient Markov-perfect equilibria (MPE) are prevalent in dynamic matching and bargaining games (DMBG). I observe this inefficiency is caused by a substantial friction commonly assumed in the literature: players must exit the market after trading once. In response, this paper studies a simple...

Gale and Sabourian (2006) discuss the existence of inefficient Markov-perfect equilibrium (MPE) in a heterogeneous market. This paper shows that the example they provide cannot be supportedas a MPE. Indeed, with two buyers and two sellers, the dispersion of bargaining positions is not...

I study the effects of improved public information on equilibrium welfare and price dispersion, providing sufficient conditions for negative and positive effects. Public information affects welfare by reducing excessive (though rational) pessimism induced by sequential learning. Reduced...

While single-level Nash equilibrium problems are quite well understood nowadays, less is known about multi-leader multi-follower games. However, these have important applications, e.g., in the analysis of electricity and gas markets, where often a limited number of firms interacts on various...