Pareto Improving Price Regulation when the Asset Market Is Incomplete

Herings, P. Jean-Jacques; Polemarchakis, H.M.

Pareto Improving Price Regulation when the Asset Market Is Incomplete

P. Jean-Jacques Herings and H.M. Polemarchakis
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H.M. Polemarchakis: Externe publicaties SBE

No 35, Research Memorandum from Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR)

Abstract: Incomplete asset markets cause competitive equilibria to be constrained sub-optimal and provides scope for Pareto improving interventions. This paper examines how intervention in prices of spot market commodities may serve this purpose. We show that if fix-price equilibria behave sufficiently regular near Walrasian equilibria, Pareto improving price regulation is generically possible. We derive sufficient conditions for fix-price equilibria to be well-behaved in the neighborhood of a competitive equilibrium. An advantage of price regulation, contrasted with interventions in individuals' asset portfolios, is that it operates anonymously, on market variables.

JEL-codes: D45 D52 D60 (search for similar items in EconPapers)
Date: 2003-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:unm:umamet:2003035

DOI: 10.26481/umamet.2003035

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