Notes on the Suboptimality Result of J. D. Geanakoplos and H. M. Polemarchakis (1986)

Antonio Jimenez-Martínez
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Antonio Jimenez-Martínez: Universidad de Guanajuato
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Estudios Económicos, 2007, vol. 22, issue 1, 111-136

Abstract: J. D. Geanakoplos and H. M. Polemarchakis (1986) prove the generic constrained suboptimality of equilibrium allocations in two period economies with incomplete markets. They perturb asset prices at equilibrium when the degree of market incompleteness equals one. Since prices do not parameterize the economy, a generic result cannot be obtained in such a way. These notes provide a detailed version of their proof in which utilities and endowments are perturbed.

Keywords: incomplete asset markets constrained suboptimality; transversality theory. (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Date: 2007
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Working Paper: Notes on the Suboptimality Result by J. D. Geanakoplos and H. M. Polemarchakis (1986) (2005)
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