Pareto Improving Price Regulation when the Asset Market Is Incomplete

P.J.J. Herings; H.M. Polemarchakis

doi:10.1007/s00199-003-0431-y

Pareto Improving Price Regulation when the Asset Market Is Incomplete

P.J.J. Herings^*, H.M. Polemarchakis

^*Corresponding author for this work

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Abstract

Incomplete asset markets cause competitive equilibria to be constrained suboptimal and provides scope for pareto improving interventions. In this paper, we examine how intervention in prices in asset or spot commodity markets serves this purpose. We show that, if fix-price equilibria behave sufficiently regularly near walrasian equilibria, pareto improving price regulation is generically possible. An advantage of price regulation, contrasted with interventions in individuals’ asset portfolios, is that it operates anonymously, on market variables.

Original language	English
Pages (from-to)	135-154
Journal	Economic Theory
Volume	25
Early online date	2004
DOIs	https://doi.org/10.1007/s00199-003-0431-y
Publication status	Published - 2005

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Pareto Improving Price Regulation when the Asset Market Is Incomplete
Herings, P. J. J. & Polemarchakis, H. M., 1 Jan 2003, Maastricht: Maastricht University School of Business and Economics, 22 p. (METEOR Research Memorandum; No. 035).
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Pareto Improving Price Regulation when the Asset Market Is Incomplete

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Pareto Improving Price Regulation when the Asset Market Is Incomplete

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