Competitive equilibrium with moral hazard in economies with multiple commodities

Alessandro Citanna () and Antonio Villanacci
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Alessandro Citanna: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique

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Abstract: We study an economy with competitive commodity markets and exclusive pairwise contractual relations with moral hazard, where both the principal and the agent can be risk averse. We show existence of equilibria and their generic constrained suboptimality, by means of a change in the compensation schemes. Such suboptimality occurs provided the number of commodities is sufficiently large relative to the number of states and pair types, and there are at least three future states of the world.

Keywords: General equilibrium; Moral hazard; Constrained suboptimality (search for similar items in EconPapers)
Date: 2002-09-01
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Published in Journal of Mathematical Economics, 2002, Vol.38,n°1-2, pp.117-147. ⟨10.1016/S0304-4068(02)00070-8⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00463221

DOI: 10.1016/S0304-4068(02)00070-8

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