On existence in equilibrium models with endogenous default
AbstractThe equilibrium concept defined by Dubey et al. (DGS, 1990, 2000, 2005) generates equilibria such that asset buyers could raise expected returns by paying more for the assets that they purchase. A simple example shows that, in fact, all equilibria may be return-dominated in that sense. Universal existence in the DGS model thus depends critically on the assumption that lenders are unable to exploit an obvious profit opportunity.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Mathematical Economics.
Volume (Year): 49 (2013)
Issue (Month): 5 ()
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Web page: http://www.elsevier.com/locate/jmateco
Default; General equilibrium; Existence; Credit rationing;
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