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Equilibria with Arbitrary Market Structure

Author

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  • Karl Vind

    (Institute of Economics, University of Copenhagen)

  • Birgit Grodal

    (Institute of Economics, University of Copenhagen)

Abstract

Fifty years ago Arrow introduced contingent commodities and Debreu observed that this reinterpretation of a commodity was enough to apply the existing general equilibrium theory to uncertainty and time. This interpretation of general equilibrium theory is the Arrow-Debreu model. The complete market predicted by this theory is clearly unrealistic, and Radner (1972) formulated and proved existence of equilibrium in a multi-period model with incomplete markets. Hart (1975) showed that the lower bound on consumption sets assumed by Radner was an essential limitation, but needed for the result. The problem raised by Hart examples was eventually solved by Duffie and Shafer (1985,86). In these papers are shown generic existence of equilibria in economics with incomplete markets. In this paper the Radner result is extended in other directions. Radner assumed a specific structure of markets, independence of preferences, indifference of preferences, and total and transitive preferences. All of these assumptions are dropped here.

Suggested Citation

  • Karl Vind & Birgit Grodal, 2003. "Equilibria with Arbitrary Market Structure," Discussion Papers 03-13, University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:kuiedp:0313
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