A macroeconomic model
In an incomplete asset market, firms compute the value of production plans by approximating them with the payoffs of portfolios of marketed assets; equivalently, by projecting their payoffs on the span of the payoffs of marketed assets; equivalently, they apply the capital asset pricing model (capm). This is a criterion that does not require firms to possess information not revealed by the prices and payoffs of marketed assets, such as the marginal valuation by shareholders of revenue in different states of the world, which is not observable. Competitive equilibria exist under standard assumptions. Competitive equilibrium allocations are typically constrained suboptimal. They are typically determinate, if firms consider the commodity payoffs of shares; even in the absence of other, nominal assets, they are typically indeterminate if firms consider the revenue payoffs of shares.
|Date of creation:||01 Dec 1995|
|Date of revision:|
|Contact details of provider:|| Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)|
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:cor:louvco:1995085. 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: (Alain GILLIS)
If references are entirely missing, you can add them using this form.