Credit market segmentation, essentiality of commodities, and supermodularity

We consider incomplete market economies where agents are subject to price-dependent trading constraints compatible with credit market segmentation. Equilibrium existence is guaranteed when either commodities are essential, i.e, indifference curves through individuals’ endowments do not intersect the...

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Bibliographic Details
Published inJournal of mathematical economics Vol. 70; pp. 115 - 122
Main Authors Faias, Marta, Torres-Martínez, Juan Pablo
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.05.2017
Elsevier Sequoia S.A
Subjects
Ambiguity
Bond markets
Commodities
Consumption
Credit
Credit market segmentation
Economic models
Essential commodities
Expected utility
Loans
Market economies
Market segmentation
Markets
Smoothness
Supermodularity
Trading
Utility functions
Essential commodities
Credit market segmentation
Supermodularity
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Summary:We consider incomplete market economies where agents are subject to price-dependent trading constraints compatible with credit market segmentation. Equilibrium existence is guaranteed when either commodities are essential, i.e, indifference curves through individuals’ endowments do not intersect the boundary of the consumption set, or utility functions are concave and supermodular. The smoothness of mappings representing preferences, financial promises, or trading constraints is not required. Hence, we may include in our framework economies where ambiguity is allowed and agents maximize the minimum expected utility over a set of priors, or where markets include non-recourse collateralized loans.
Bibliography:ObjectType-Article-1
SourceType-Scholarly Journals-1
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ISSN:0304-4068
1873-1538
DOI:10.1016/j.jmateco.2017.02.006