Competitive theories for economies with general transactions technology
In this paper, the authors describe and compare two approaches to analyzing transactions costs in a general equilibrium setting. In the first approach, which the authors label the transactions costs approach, the commodity space is the same as that used in models without transactions costs. In the second approach, which we label the valuation equilibrium approach, the commodity space is chosen so that the exchange problem can be formulated as an instance of the abstract exchange model described in Debreu (1954). The authors argue that the valuation equilibrium approach provides a tractable framework for quantitative studies of the effects of transactions costs on economy-wide resource allocation.
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- Kurz, Mordecai, 1974. "Arrow-Debreu Equilibrium of an Exchange Economy with Transaction Cost," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(3), pages 699-717, October.
- Heller, Walter Perrin & Starr, Ross M, 1976. "Equilibrium with Non-convex Transactions Costs: Monetary and Non-monetary Economies," Review of Economic Studies, Wiley Blackwell, vol. 43(2), pages 195-215, June.
- Chatterjee, Satyajit & Corbae, Dean, 1995.
"Valuation Equilibria with Transactions Costs,"
American Economic Review,
American Economic Association, vol. 85(2), pages 287-90, May.
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