Financial equilibrium with differential information in a production economy: A basic model of 'generic' existence

Lionel de Boisdeffre ()
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Lionel de Boisdeffre: Centre d'Economie de la Sorbonne, https://centredeconomiesorbonne.univ-paris1.fr

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: We study the existence of equilibria in two-period production economies, where asymmetrically informed agents exchange securities, on incomplete financial markets, and commodities, on spot markets with a perfect foresight of future prices. Extending our pure-exchange existence theorems, we show that equilibria exist for an open dense set of economies, parametrized by the assets' payoffs, and for all economies, whose assets are nominal or numeraire. The model covers all types of private ownership - sole proprietorship, partnership or corporations - and all sectors consistent with competition, i.e., with non-increasing returns to scale. It is a step towards proving existence in stochastic production economies, and the full existence of sequential equilibria with production, when perfect price foresight fails to prevail

Keywords: sequential equilibrium; production economies; perfect foresight; existence; rational expectations; fiancial markets; asymmetric information; arbitrage (search for similar items in EconPapers)
JEL-codes: D52 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2017-09
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:17056

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