Credit Market Segmentation, Essentiality of Commodities, and Supermodularity

Marta Faias and Juan Pablo Torres-Martinez

Working Papers from University of Chile, Department of Economics

Abstract: We consider incomplete market economies where agents are subject to price-dependent trading constraints compatible with credit market segmentation. Equilibrium existence is guaranteed when either commodities are essential, i.e, indifference curves through individuals' endowments do not intersect the boundary of the consumption set, or utility functions are concave and supermodular. Since we do not require the smoothness of mappings representing preferences, financial promises, or trading constraints, our approach is compatible with the existence of ambiguity-adverse agents, non-recourse collateralized loans, or income-dependent thresholds determining the access to credit.

Pages: 16 pages
Date: 2016-03
New Economics Papers: this item is included in nep-upt
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Journal Article: Credit market segmentation, essentiality of commodities, and supermodularity (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:udc:wpaper:wp420

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