Core concepts for incomplete market economies
We examine the notion of the core when cooperation takes place in a setting with time and uncertainty. We do so in a two-period general equilibrium setting with incomplete markets. Market incompleteness implies that players cannot make all possible binding commitments regarding their actions at different date-events. We unify various treatments of dynamic core concepts existing in the literature. This results in definitions of the Classical Core, the Segregated Core, the Two-stage Core, the Strong Sequential Core, and the Weak Sequential Core. Except for the Classical Core, all these concepts can be defined by requiring the absence of blocking in period 0 and at any date-event in period 1. The concepts only differ with respect to the notion of blocking in period 0. To evaluate these concepts, we study three market structures in detail: strongly complete markets, incomplete markets in finance economies, and incomplete markets in settings with multiple commodities. Even when markets are strongly complete, the Classical Core is argued not to be an appropriate concept. For the general case of incomplete markets, the Weak Sequential Core is the only concept that does not suffer from major defects.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Atsushi Kajii & Antonio Villanacci & Alessandro Citanna, 1998. "Constrained suboptimality in incomplete markets: a general approach and two applications," Economic Theory, Springer, vol. 11(3), pages 495-521.
- P. J. J. Herings & H. M. Polemarchakis, 2003.
"Pareto Improving Price Regulation When the Asset Market is Incomplete,"
03-20, University of Copenhagen. Department of Economics.
- P. Herings & Herakles Polemarchakis, 2005. "Pareto improving price regulation when the asset market is incomplete," Economic Theory, Springer, vol. 25(1), pages 135-154, 01.
- P. Jean-Jacques Herings & Heracles M. Polemarchakis, 1999. "Pareto Improving Price Regulation When the Asset Market Is Incomplete," Cowles Foundation Discussion Papers 1210, Cowles Foundation for Research in Economics, Yale University.
- HERINGS, Jean-Jacques & POLEMARCHAKIS, Heracles, 1998. "Pareto improving price regulation when the asset market is incomplete," CORE Discussion Papers 1998041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Herings, P.J.J. & Polemarchakis, H.M., 1999. "Pareto Improving Price Regulation when the Asset Market is Incomplete," Discussion Paper 1999-30, Tilburg University, Center for Economic Research.
- Herings P. Jean-Jacques & Polemarchakis H. M., 2000. "Pareto Improving Price Regulation When the Asset Market Is Incomplete," Research Memorandum 008, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
- Herings P. Jean-Jacques & Polemarchakis H. M., 2002. "Pareto Improving Price Regulation When the Asset Market Is Incomplete," Research Memorandum 008, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
- Becker, Robert A & Chakrabarti, Subir K, 1995. "The Recursive Core," Econometrica, Econometric Society, vol. 63(2), pages 401-23, March.
- Laurence Kranich & Andrés Perea & Hans Peters, 2005.
"Core Concepts For Dynamic Tu Games,"
International Game Theory Review (IGTR),
World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 43-61.
- Leonidas C. Koutsougeras, 1998. "A two-stage core with applications to asset market and differential information economies," Economic Theory, Springer, vol. 11(3), pages 563-584.
- Repullo, Rafael, 1988. "The Core of an Economy with Transaction Costs," Review of Economic Studies, Wiley Blackwell, vol. 55(3), pages 447-58, July.
- Grossman, Sanford J., 1977. "A characterization of the optimality of equilibrium in incomplete markets," Journal of Economic Theory, Elsevier, vol. 15(1), pages 1-15, June.
- Roth, Alvin E. & Postlewaite, Andrew, 1977. "Weak versus strong domination in a market with indivisible goods," Journal of Mathematical Economics, Elsevier, vol. 4(2), pages 131-137, August.
- Predtetchinski, Arkadi & Herings, P. Jean-Jacques & Peters, Hans, 2002.
"The strong sequential core for two-period economies,"
Journal of Mathematical Economics,
Elsevier, vol. 38(4), pages 465-482, December.
- Predtetchinski,Arkadi & Herings,Jean-Jacques, 2001. "The Strong Sequential Core for Two-period Economies," Research Memorandum 005, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
- P.J.J. Herings & H. Peeters, 2001. "The Strong Sequential Core for Two-period Economies," Microeconomics 0111002, EconWPA.
- Gale, Douglas, 1978. "The core of a monetary economy without trust," Journal of Economic Theory, Elsevier, vol. 19(2), pages 456-491, December.
- Predtetchinski A. & Herings P.J.J. & Perea A., 2002.
"The Weak Sequential Core for Two-period Economies,"
Game Theory and Information
- Repullo, Rafael, 1988. "A new characterization of the efficiency of equilibrium with incomplete markets," Journal of Economic Theory, Elsevier, vol. 44(2), pages 217-230, April.
- Kajii Atsushi, 1994. "Anonymity and Optimality of Competitive Equilibria when Markets Are Incomplete," Journal of Economic Theory, Elsevier, vol. 64(1), pages 115-129, October.
When requesting a correction, please mention this item's handle: RePEc:eee:mateco:v:47:y:2011:i:4:p:595-609. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.