Production in General Equilibrium with Incomplete Markets

Pascal Stiefenhofer

Discussion Papers from Department of Economics, University of York

Abstract: Short and long run production is introduced in a two period general equilibrium model with incomplete markets, where firms are profit maximizers. They maximize profits in the long run, which implies profit maximization over both periods. The sequential structure of the model is such that, firms issue shares in the short run in order to build up long run production capacity. Long run production takes place in the second period subject to long run technological feasibility and installed capacity constraints. It is shown that equilibrium exists generically.

Keywords: General Equilibrium; Incomplete Markets; Production. (search for similar items in EconPapers)
JEL-codes: D52 D53 D62 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-bec and nep-dge
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