Abstract
| Original language | English |
|---|---|
| Place of Publication | Tilburg |
| Publisher | Microeconomics |
| Number of pages | 44 |
| Volume | 1999-30 |
| Publication status | Published - 1999 |
Publication series
| Name | CentER Discussion Paper |
|---|---|
| Volume | 1999-30 |
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Keywords
- incomplete asset market
- fix - price equilibria
- Pareto improvement
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Pareto Improving Price Regulation when the Asset Market is Incomplete. / Herings, P.J.J.; Polemarchakis, H.M.
Tilburg : Microeconomics, 1999. (CentER Discussion Paper; Vol. 1999-30).Research output: Working paper › Discussion paper › Other research output
TY - UNPB
T1 - Pareto Improving Price Regulation when the Asset Market is Incomplete
AU - Herings, P.J.J.
AU - Polemarchakis, H.M.
N1 - Pagination: 44
PY - 1999
Y1 - 1999
N2 - When the asset market is incomplete, competitive equilibria are constrained suboptimal, which provides a scope for pareto improving interventions. Price regulation can be such a pareto improving policy, even when the welfare effects of rationing are taken into account. An appealing aspect of price regulation is that it that it operates anonymously on market variables. Fix - price equilibria exist under weak assumptions. Such equilibria permit a competitive analysis of an economy with an incomplete asset market that is out of equilibrium. Arbitrage opportunities may arise: with three or more assets actively traded, an individual may hold an arbitrage portfolio at equilibrium. The local existence of fix- price equilibrium for prices that are almost competitive may fail for robust examples. Under necessary and sufficient conditions for the local existence of fix - price equilibria, pareto improving price regulation is generically possible.
AB - When the asset market is incomplete, competitive equilibria are constrained suboptimal, which provides a scope for pareto improving interventions. Price regulation can be such a pareto improving policy, even when the welfare effects of rationing are taken into account. An appealing aspect of price regulation is that it that it operates anonymously on market variables. Fix - price equilibria exist under weak assumptions. Such equilibria permit a competitive analysis of an economy with an incomplete asset market that is out of equilibrium. Arbitrage opportunities may arise: with three or more assets actively traded, an individual may hold an arbitrage portfolio at equilibrium. The local existence of fix- price equilibrium for prices that are almost competitive may fail for robust examples. Under necessary and sufficient conditions for the local existence of fix - price equilibria, pareto improving price regulation is generically possible.
KW - incomplete asset market
KW - fix - price equilibria
KW - Pareto improvement
M3 - Discussion paper
VL - 1999-30
T3 - CentER Discussion Paper
BT - Pareto Improving Price Regulation when the Asset Market is Incomplete
PB - Microeconomics
CY - Tilburg
ER -