Production in General Equilibrium with Incomplete Markets
AbstractShort and long run production is introduced in a two period general equilibrium model with incomplete markets, where firms are profit maximizers. They maximize profits in the long run, which implies profit maximization over both periods. The sequential structure of the model is such that, firms issue shares in the short run in order to build up long run production capacity. Long run production takes place in the second period subject to long run technological feasibility and installed capacity constraints. It is shown that equilibrium exists generically.
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Bibliographic InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 09/06.
Date of creation: Mar 2009
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General Equilibrium; Incomplete Markets; Production.;
Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
- D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-03-22 (All new papers)
- NEP-BEC-2009-03-22 (Business Economics)
- NEP-DGE-2009-03-22 (Dynamic General Equilibrium)
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