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Pooling and endogenous market incompleteness
| Content Provider | Semantic Scholar |
|---|---|
| Author | Citanna, Alessandro Villanacci, Antonio |
| Copyright Year | 2004 |
| Abstract | Summary.We study a financial market economy with a continuum of borrowers and pooling of borrowers’ promises. Under these conditions and in the absence of designing costs, utility-maximizing decisions of price-taking borrowers may lead to financial market incompleteness. Parametrizing equilibria through the borrowers’ no-arbitrage beliefs, we link expectations to the financial market structure. Markets are complete if and only if borrowers’ beliefs are homogeneous. Price-taking behavior causes a coordination problem which in turn yields indeterminacy and inefficiency of equilibrium allocations. |
| Starting Page | 549 |
| Ending Page | 560 |
| Page Count | 12 |
| File Format | PDF HTM / HTML |
| DOI | 10.1007/s00199-004-0489-1 |
| Volume Number | 24 |
| Alternate Webpage(s) | http://campus.hec.fr/profs/citanna/fininnet489.pdf |
| Alternate Webpage(s) | https://doi.org/10.1007/s00199-004-0489-1 |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
