On the objective of firms under uncertainty with stock markets
AbstractIn a multi-period, multi-commodity economy with stock markets, we try to extend the work of DrÃ¨ze (1974) to define the behaviour of the firms. We exhibit first order necessary conditions for a constrained Pareto optimal allocation. The financial constraints lead to non-collinear supporting spot prices for the consumers at each node. Nevertheless, the firms are satisfying a first order necessary condition for profit maximization with respect to a price computed as the DrÃ¨ze's prices. These prices are also consistent in the sense that the present value of the firms computed with the personal prices of the stockholders and with the DrÃ¨ze's prices coincide when short sales are allowed. We also show that these conditions are simpler if we consider an allocation at which each consumer maximizes his preferences, when they are smooth. This allows us to give a formal definition for the objective of the firms, which extend the DrÃ¨ze's criterion. We also discuss different definitions of constrained feasibility and we provide the related necessary conditions, which do not differ for the production sector.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Mathematical Economics.
Volume (Year): 40 (2004)
Issue (Month): 5 (August)
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Web page: http://www.elsevier.com/locate/jmateco
Other versions of this item:
- Jean-Marc Bonnisseau & Oussama Lachiri, 2004. "On the objective of firms under uncertainty with stock markets," Cahiers de la Maison des Sciences Economiques b04122, Université Panthéon-Sorbonne (Paris 1).
- C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
- D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
- D60 - Microeconomics - - Welfare Economics - - - General
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