Active Intermediation in Overlapping Generations Economies with Production and Unsecured Debt

Mark Pingle () and Leigh Tesfatsion ()

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: Why does the First Welfare Theorem fail in standard overlapping generations economies with production, such as Diamond (AER, 1965) and Tirole (Econometrica, 1985)? This study argues that the reason for this failure can be attributed to the passive intermediation role played by the Walrasian Auctioneer in this models. Specifically, the study demonstrates that when intermediation is instead modeled as a contestable activity carried out by corporate intermediaries owned by consumer-shareholders and operated in their interest, every equilibrium is Pareto efficient. Annotated pointers to related work can be accessed here: http://www2.econ.iastate.edu/tesfatsi/dehome.htm

JEL-codes: C6 E2 E4 (search for similar items in EconPapers)
Date: 1998-01-01
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Citations: View citations in EconPapers (2)

Published in Macroeconomic Dynamics 1998, vol. 2, pp. 183-212

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Related works:
Journal Article: ACTIVE INTERMEDIATION IN OVERLAPPING GENERATIONS ECONOMIES WITH PRODUCTION AND UNSECURED DEBT (1998)
Working Paper: Active Intermediation in Overlapping Generations Economies with Production and Unsecured Debt (1998)
Working Paper: Active Intermediation in Overlapping Generations Economies with Production and Unsecured Debt (1998)
Working Paper: Active Intermediation in Overlapping Generations Economies with Production and Unsecured Debt (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:1953

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