These four essays address issues related to the incompleteness of financial markets in competitive exchange economies. The main point we try to establish is that when markets are incomplete, a wide range of economic policies have an impact on equilibrium allocations and therefore on the welfare...

In a three-period finite competitive exchange economy with incomplete financial markets and retrading, we study the possibility of controlling asset price volatility through financial innovation. We first give sufficient conditions on preferences and endowments implying that whatever is the...