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Article
Credit market segmentation, essentiality of commodities, and supermodularity
Journal of Mathematical Economics (2017)
  • Marta Faias, Universidade Nova de Lisboa
  • Juan Pablo Torres-Martínez, University of Chile
Abstract
We consider incomplete market economies where agents are subject to price-dependent trading constraints compatible with credit market segmentation. Equilibrium existence is guaranteed when either commodities are essential, i.e, indifference curves through individuals’ endowments do not intersect the boundary of the consumption set, or utility functions are concave and supermodular. The smoothness of mappings representing preferences, financial promises, or trading constraints is not required. Hence, we may include in our framework economies where ambiguity is allowed and agents maximize the minimum expected utility over a set of priors, or where markets include non-recourse collateralized loans.
Keywords
  • Credit market segmentation,
  • Essential commodities,
  • Supermodularity
Disciplines
Publication Date
2017
Citation Information
Faias, M., and J.P. Torres-Martínez (2017): "Credit market segmentation, essentiality of commodities, and supermodularity," Journal of Mathematical Economics, volume 70, pages 115-122.