Type: Working Paper
Markets and Contracts
Working Paper, EUI ECO, 2010/29
BISIN, Alberto, GEANAKOPOLS, John, GOTTARDI, Piero, MINELLI, Enrico, POLEMARCHAKIS, Herakles, Markets and Contracts, EUI ECO, 2010/29 - http://hdl.handle.net/1814/14255
Retrieved from Cadmus, EUI Research Repository
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, there exist Pareto improving interventions via linear, anonymous taxes.
Cadmus permanent link: http://hdl.handle.net/1814/14255
Series/Number: EUI ECO; 2010/29