SFB 303 Discussion Paper No. A-450

Author: Hens, Thorsten, and Piero Gottardi
Title: The Survival Assumption and Existence of Competitive Equlibria when Asset Markets are Incomplete
Abstract: The paper studies the role and the formulation of the survival assumption with incomplete markets. We are able to show the existence of a competitive equlibrium when the agents' endowments lie on the boundary of their comsumption set. However, for this some additional assumptions with respect to the complete market case are needed. These are joint restrictions on the asset structure and the distribution of the endowments and preferences. In the second part of the paper a precise characterization of these conditions is provided, and it is shown that our findings allow a substantial improvement upon earlier results in the literature.
Keywords: incomplete markets, existence, resiurce relatedness
JEL-Classification-Number: D52, C62, G10
Creation-Date: June 1994
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