A Case for Incomplete Markets
Lawrence Blume,
Timothy Cogley (),
David Easley,
Thomas Sargent and
Viktor Tsyrennikov
No 313, Economics Series from Institute for Advanced Studies
Abstract:
We propose a new welfare criterion that allows us to rank alternative financial market structures in the presence of belief heterogeneity. We analyze economies with complete and incomplete financial markets and/or restricted trading possibilities in the form of borrowing limits or transaction costs. We describe circumstances under which various restrictions on financial markets are desirable according to our welfare criterion.
Keywords: social welfare; heterogeneous beliefs; spurious unanimity; speculation; pessimism; incomplete markets; financial regulation (search for similar items in EconPapers)
Pages: 45 pages
Date: 2015-06
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (13)
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https://irihs.ihs.ac.at/id/eprint/3548 First version, 2015 (application/pdf)
Related works:
Journal Article: A case for incomplete markets (2018) 
Working Paper: The Case for Incomplete Markets (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ihs:ihsesp:313
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