| Information-Constrained Optima with Retrading: An Externality and Its Market-Based Solution. | |
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MedLine Citation:
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PMID: 21765540 Owner: NLM Status: Publisher |
Abstract/OtherAbstract:
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This paper studies the efficiency of competitive equilibria in environments with a moral hazard problem and unobserved states, both with retrading in ex post spot markets. The interaction between private information problems and the possibility of retrade creates an externality, unless preferences have special, restrictive properties. The externality is internalized by allowing agents to contract ex ante on market fundamentals determining the spot price or interest rate, over and above contracting on actions and outputs. Then competitive equilibria are equivalent with the appropriate notion of constrained Pareto optimality. Examples show that it is possible to have multiple market fundamentals or price-islands, created endogenously in equilibrium. |
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Authors:
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Weerachart T Kilenthong; Robert M Townsend |
Publication Detail:
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Type: JOURNAL ARTICLE |
Journal Detail:
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Title: Journal of economic theory Volume: 146 ISSN: 0022-0531 ISO Abbreviation: - Publication Date: 2011 May |
Date Detail:
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Created Date: 2011-7-18 Completed Date: - Revised Date: - |
Medline Journal Info:
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Nlm Unique ID: 101086004 Medline TA: J Econ Theory Country: - |
Other Details:
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Languages: ENG Pagination: 1042-1077 Citation Subset: - |
Affiliation:
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Research Institute for Policy Evaluation and Design (RIPED) University of the Thai Chamber of Commerce, Thailand. |
Export Citation:
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| MeSH Terms | |
Descriptor/Qualifier:
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| Grant Support | |
ID/Acronym/Agency:
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R01 HD027638-15//NICHD NIH HHS; R01 HD027638-16//NICHD NIH HHS; R01 HD027638-17//NICHD NIH HHS; R01 HD027638-18//NICHD NIH HHS |
From MEDLINE®/PubMed®, a database of the U.S. National Library of Medicine
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