Two-period economies with price-contingent deliveries

• Type: Article in International Scientific Journal
• Date: 2015

Authors

João Correia-da-Silva (Author) FEP

Journal

Title: Economic Theory

Vol. 59

Pages: 509-525

ISSN: 0938-2259

Publisher: Springer Nature

Indexing

ISI Web of Knowledge - 2 Citations

ISI Web of Science

Scopus - 0 Citations

Other information

Authenticus ID: P-00G-BE8

DOI: 10.1007/s00199-014-0839-6

Abstract (EN): An economy with ex ante markets for future delivery contingent on ex post spot market prices is considered. Since spot prices are publicly observed ex post, this framework bypasses the enforcement problems that may arise as a result of differential information about states of nature. Generically, the equilibria of an economy with price-contingent deliveries coincide with the equilibria of the corresponding economy with state-contingent deliveries. However, replacing state-contingent deliveries with price-contingent deliveries may generate additional equilibria and/or remove some equilibria. The perfect foresight hypothesis is crucial to avoid a severe problem of nonexistence of equilibrium. © 2014, Springer-Verlag Berlin Heidelberg.

Language: English

Type (Professor's evaluation): Scientific