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Nash equilibria applied to Spot-financial equilibria in General equilibrium incomplete market models

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  • Fugarolas, Guadalupe

Abstract

We consider a two period pure exchange economy with a finite number of states of nature at the second date. The economy consists of a real asset structure and a finite set of durable goods in the initial period that depreciate; we suppose that there is only one single good available in each state of nature at the second date. In this paper, we demonstrate that the spot-financial equilibrium can be obtained as a Nash equilibrium of a market game in which the strategies of the players consist in suggesting prices and quantities for both goods and assets.

Suggested Citation

  • Fugarolas, Guadalupe, 2006. "Nash equilibria applied to Spot-financial equilibria in General equilibrium incomplete market models," MPRA Paper 470, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:470
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    File URL: https://mpra.ub.uni-muenchen.de/470/1/MPRA_paper_470.pdf
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    References listed on IDEAS

    as
    1. Dubey, Pradeep & Geanakoplos, John, 2003. "From Nash to Walras via Shapley-Shubik," Journal of Mathematical Economics, Elsevier, vol. 39(5-6), pages 391-400, July.
    2. Dubey, Pradeep & Shapley, Lloyd S., 1994. "Noncooperative general exchange with a continuum of traders: Two models," Journal of Mathematical Economics, Elsevier, vol. 23(3), pages 253-293, May.
    3. Schmeidler, David, 1980. "Walrasian Analysis via Strategic Outcome Functions," Econometrica, Econometric Society, vol. 48(7), pages 1585-1593, November.
    4. Magill, Michael & Shafer, Wayne, 1991. "Incomplete markets," Handbook of Mathematical Economics,in: W. Hildenbrand & H. Sonnenschein (ed.), Handbook of Mathematical Economics, edition 1, volume 4, chapter 30, pages 1523-1614 Elsevier.
    5. Hart, Oliver D., 1975. "On the optimality of equilibrium when the market structure is incomplete," Journal of Economic Theory, Elsevier, vol. 11(3), pages 418-443, December.
    6. Radner, Roy, 1972. "Existence of Equilibrium of Plans, Prices, and Price Expectations in a Sequence of Markets," Econometrica, Econometric Society, vol. 40(2), pages 289-303, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Incomplete markets; market games; Nash equilibrium; strategic outcome functions;

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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