Expectations over durable assets: How to avoid the formation of value bubbles

Victor H. ROSAS Martinez
Additional contact information
Victor H. ROSAS Martinez: Independent Researcher

Journal of Economics Library, 2018, vol. 5, issue 3, 200-210

Abstract: There is a finite set of characteristics which can be present in a durable asset adding value to it, and that are not necessarily part of it in the moment of its acquisition. We represent formally how the expectations over the possible future characteristics of these goods influence its price, and get the conditions for the formation of bubbles, which allows us to propose mechanisms to avoid this kind of instinctive collective regimes. Posteriorly we extend our analysis to consider the case of monopoly and of an m-firms oligopoly producing these kinds of goods, finding that the cardinality of the firm(s)' possible plans of production to maximize benefits is the same. We show relation between the assets' prices and the cardinalities of the sets of suppliers, assets' varieties and entry consumers, with an indirect dependence on the rent labor wages. We model boundedly an analysis of the effect of tendencies like corruption on newly informed and non-Bayesian probabilities that constitute the prices. Finally, some extra provided mechanisms to avoid bubbles focus in reverting badly programed rule of thumbs, to get back to the right great rules respect.

Keywords: Non-bayesian expectations; Price bubbles; Profit maximization; Competition; Corruption; Mechanism design. (search for similar items in EconPapers)
JEL-codes: G12 G13 G18 G28 K42 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.econsciences.com/index.php/JEL/article/view/1746/1717 (application/pdf)
https://journals.econsciences.com/index.php/JEL/article/view/1746 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cvv:journ5:v:5:y:2018:i:3:p:200-210

Access Statistics for this article

Journal of Economics Library is currently edited by Bilal KARGI

More articles in Journal of Economics Library from EconSciences Journals Istanbul, Turkey.
Bibliographic data for series maintained by Bilal KARGI ().