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Markets and contracts

Author

Listed:
  • Bisin, A.
  • Geanakoplos, J.D.
  • Gottardi, P.
  • Minelli, E.
  • Polemarchakis, H.

Abstract

Economies with asymmetric information are encompassed by an extension of the model of general competitive equilibrium that does not require an explicit modeling of private information. Sellers have discretion over deliveries on contracts; this is in common with economies with default, incomplete contracts or price rigidities. Competitive equilibria exist and anonymous markets are viable. But, for a generic economy, competitive equilibrium allocations are constrained suboptimal: there exist Pareto improving interventions via linear, anonymous taxes.

Suggested Citation

  • Bisin, A. & Geanakoplos, J.D. & Gottardi, P. & Minelli, E. & Polemarchakis, H., 2011. "Markets and contracts," Journal of Mathematical Economics, Elsevier, vol. 47(3), pages 279-288.
    • Handle: RePEc:eee:mateco:v:47:y:2011:i:3:p:279-288
    DOI: 10.1016/j.jmateco.2010.12.017
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    More about this item

    Keywords

    Asymmetric information; Competitive markets; Equilibrium;
    All these keywords.

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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