dc.contributor.author | WILLEMS, Bert | |
dc.contributor.author | MORBEE, Joris | |
dc.date.accessioned | 2012-07-12T16:20:45Z | |
dc.date.available | 2012-07-12T16:20:45Z | |
dc.date.issued | 2012 | |
dc.identifier.issn | 1028-3625 | |
dc.identifier.uri | https://hdl.handle.net/1814/22778 | |
dc.description.abstract | In this paper we show that free entry decisions may be socially ineffcient, even in a perfectly competitive homogeneous goods market with non-lumpy investments. In our model, inefficient entry decisions are the result of risk-aversion of incumbent producers and consumers, combined with incomplete financial markets which limit risk-sharing between market actors. Investments
in productive assets affect the distribution of equilibrium prices and quantities, and create risk spillovers. From a societal perspective, entrants underinvest in technologies that would reduce systemic sector risk, and may overinvest in risk-increasing technologies. The inefficiency is shown to disappear when a complete financial market of tradable risk-sharing instruments is available, although the introduction of any individual tradable instrument may actually decrease effciency. | en |
dc.format.mimetype | application/pdf | |
dc.language.iso | en | en |
dc.relation.ispartofseries | EUI RSCAS | en |
dc.relation.ispartofseries | 2012/35 | en |
dc.relation.ispartofseries | Loyola de Palacio Programme on Energy Policy | en |
dc.rights | info:eu-repo/semantics/openAccess | |
dc.title | Risk Spillovers and Hedging: Why do firms invest too much in systemic risk? | en |
dc.type | Working Paper | en |
eui.subscribe.skip | true | |