Walrasian foundations for equilibria in segmented markets

Rohit Rahi () and Jean-Pierre Zigrand

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We study an economy with segmented financial markets and strategic arbitrageurs who link these markets. We show that the equilibrium of the arbitraged economy is asymptotically Walrasian in the sense that it converges to the equilibrium of an appropriately defined competitive economy with no arbitrageurs. The equilibrium of this competitive economy, called Walrasian equilibrium with restricted consumption, is related to - though not identical to - the well-known Walrasian equilibrium with restricted participation. This characterization serves to clarify the role that arbitrageurs play in integrating markets. - See more at: http://www.systemicrisk.ac.uk/publications/discussion-papers/walrasian-foundations-equilibria-segmented-markets#sthash.G3XjPMFl.dpuf

Keywords: segmented markets; arbitrage; restricted participation. (search for similar items in EconPapers)
JEL-codes: D52 G10 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2013-11-18
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Walrasian foundations for equilibria in segmented markets (2014)
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