 Pareto improving price regulation when the asset market is incompleteH. M. Polemarchakis and P. Jean-Jacques Herings No 694, HEC Research Papers Series from HEC Paris Abstract: When the asset is incomplete, competitive equilibria are constrained suboptimal, which provides scope for Pareto improving interventions. Price regulation can be such a Pareto improving policy, even when the welfare effects of rationing are taken into account. An appealing aspect of price regulation is that it operates anonymously, on market variables. The welfare analysis of price regulation calls for an extension of the equilibrium theory of incomplete markets to fix-price equilibria. Fix-price equilibria exist under standard assumptions. Necessary and sufficient conditions characterized fix-price allocations that vary differentiably with the regulated prices of commodities and assets in a neighborhood of a competitive equilibrium. Pareto improving price regulation is generically possible. Keywords: Incomplete asset market; fix-price equilibria; Pareto improvement (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:0694 Access Statistics for this paper More papers in HEC Research Papers Series from HEC Paris HEC Paris, 78351 Jouy-en-Josas cedex, France. Contact information at EDIRC. |
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