Constrained suboptimality in incomplete markets: a general approach and two applications

Atsushi Kajii, Antonio Villanacci () and Alessandro Citanna
Additional contact information
Alessandro Citanna: GSIA, Carnegie Mellon University, Pittsburgh, PA 15213, USA

Economic Theory, 1998, vol. 11, issue 3, 495-521

Abstract: In this paper we re-examine generic constrained suboptimality of equilibrium allocations with incomplete numeraire asset markets. We provide a general framework which is capable of resolving some issues left open by the previous literature, and encompasses many kinds of intervention in partially controlled market economies. In particular, we establish generic constrained suboptimality, as studied by Geanakoplos and Polemarchakis, even without an upper bound on the number of households. Moreover, we consider the case where asset markets are left open, and the planner can make lump-sum transfers in a limited number of goods. We show that such a perfectly anticipated wealth redistribution policy, though consistent with the assumed incomplete financial structure, is typically effective.

JEL-codes: C60 D52 D60 (search for similar items in EconPapers)
Date: 1998-05-05
Note: Received: August 14, 1995; revised version: April 11, 1997
References: Add references at CitEc
Citations: View citations in EconPapers (113)

Downloads: (external link)
http://link.springer.de/link/service/journals/00199/papers/8011003/80110495.pdf (application/pdf)
http://link.springer.de/link/service/journals/0019 ... 11003/80110495.ps.gz (application/postscript)
Access to the full text of the articles in this series is restricted

Related works:
Working Paper: Constrained suboptimality in incomplete markets: a general approach and two applications (1998)
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:spr:joecth:v:11:y:1998:i:3:p:495-521

Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/199/PS2

Access Statistics for this article

Economic Theory is currently edited by Nichoals Yanneils

More articles in Economic Theory from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().