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Existence of Equilibrium in Financial Markets: Hart´s Securities Exchange Model with Consumption in the First Period


  • Jean Pietro Bonaldi Varón



Hart has established necessary and su¢ cient conditions for the existence of equilibrium in an economy consisting of two time periods in which agents trade assets whose returns depend on an uncertain state of nature. Hammond has enounced an equivalent condition from an alternative approach to Hart.s model. In both cases, it is assumed that agents maximize the expected value of their utility in the second period, when the asset returns are paid. In this paper, Hart´s model is modified in such a way that agents also value consumption in the first period and the implications of this modi.cation on the conditions proposed by these authors are analyzed.

Suggested Citation

  • Jean Pietro Bonaldi Varón, 2008. "Existence of Equilibrium in Financial Markets: Hart´s Securities Exchange Model with Consumption in the First Period," DOCUMENTOS CEDE 006711, UNIVERSIDAD DE LOS ANDES-CEDE.
  • Handle: RePEc:col:000089:006711

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    References listed on IDEAS

    1. Werner, Jan, 1987. "Arbitrage and the Existence of Competitive Equilibrium," Econometrica, Econometric Society, vol. 55(6), pages 1403-1418, November.
    2. Hart, Oliver D., 1974. "On the existence of equilibrium in a securities model," Journal of Economic Theory, Elsevier, vol. 9(3), pages 293-311, November.
    3. Green, Jerry R, 1973. "Temporary General Equilibrium in a Sequential Trading Model with Spot and Futures Transactions," Econometrica, Econometric Society, vol. 41(6), pages 1103-1123, November.
    4. Andrés Carvajal & Alvaro Riascos, 2006. "Belief Non-Equivalence And Financial Trade: A Comment On A Result By Araujo And Sandroni," DOCUMENTOS CEDE 002062, UNIVERSIDAD DE LOS ANDES-CEDE.
    5. Hammond, Peter J., 1983. "Overlapping expectations and Hart's conditions for equilibrium in a securities model," Journal of Economic Theory, Elsevier, vol. 31(1), pages 170-175, October.
    6. Page, Frank Jr., 1987. "On equilibrium in Hart's securities exchange model," Journal of Economic Theory, Elsevier, vol. 41(2), pages 392-404, April.
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    More about this item


    General Equilibrium; financial markets; securities model;

    JEL classification:

    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets


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