# Strategic market games with a finite horizon and incomplete markets

## Author Info

Listed author(s):
• Gaël Giraud

()

• Sonia Weyers

()

## Abstract

We study a strategic market game associated to an intertemporal economy with a finite horizon and incomplete markets. We demonstrate that generically, for any finite number of players, every sequentially strictly individually rational and default-free stream of allocations can be approximated by a full subgame-perfect equilibrium. As a consequence, imperfect competition may Pareto-dominate perfect competition when markets are incomplete. Moreover - and this contrasts with the main message conveyed by the market games literature - there exists a large open set of initial endowments for which full subgame-perfect equilibria do not converge to $\eta$ -efficient allocations when the number of players tends to infinity. Finally, strategic speculative bubbles may survive at full subgame-perfect equilibria. Copyright Springer-Verlag Berlin/Heidelberg 2004

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File URL: http://hdl.handle.net/10.1007/s00199-003-0389-9

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## Bibliographic Info

Article provided by Springer & Society for the Advancement of Economic Theory (SAET) in its journal Economic Theory.

Volume (Year): 23 (2004)
Issue (Month): 3 (March)
Pages: 467-491

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 Handle: RePEc:spr:joecth:v:23:y:2004:i:3:p:467-491 DOI: 10.1007/s00199-003-0389-9 Contact details of provider: Web page: http://www.springer.com Order Information: Web: http://www.springer.com/economics/economic+theory/journal/199/PS2

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