Markets and Contracts
Title: Markets and Contracts
Author: BISIN, Alberto; GEANAKOPOLS, John; GOTTARDI, Piero; MINELLI, Enrico; POLEMARCHAKIS, Herakles
Citation: Journal of Mathematical Economics, 2011, 47, 3, 279–288
Economies with asymmetric information are encompassed by an extension of the model of general competitive equilibrium that does not require an explicit modeling of private information. Sellers have discretion over deliveries on contracts; this is in common with economies with default, incomplete contracts or price rigidities. Competitive equilibria exist and anonymous markets are viable. But, for a generic economy, competitive equilibrium allocations are constrained suboptimal: there exist Pareto improving interventions via linear, anonymous taxes.
This paper is a revised version of EUI ECO Working Paper 2010/29
Type of Access: openAccess