Learn More
We consider economies with incomplete markets, production, and a given distribution of initial endowments. The main purpose of the paper is to present a robust example of an economy with only one firm and one good per state in which no production decision entails a constrained efficient outcome. In particular, the unique Drèze equilibrium is dominated by(More)
We consider a firm acting strategically on behalf of its shareholders. The price normalization problem arising in general equilibrium models of imperfect competition can be overcome by using the concept of real wealth maximization. This concept is based on shareholders' aggregate demand and does not involve any utility comparisons. We explore the efficiency(More)
* Earlier versions of this paper circulated under the title " A Model of Firm Formation and Skills Acquisition. " We thank seminar audiences at Zame) for financial support. We have discussed this work with many helpful people, including Abstract This paper provides an extension of general equilibrium theory that incorporates the actions of individuals both(More)
This paper defines a general equilibrium model with exchange and club formation. Agents trade multiple private goods widely in the market, can belong to several clubs, and care about the characteristics of the other members of their clubs. The space of agents is a continuum, but clubs are finite. It is shown that (i) competitive equilibria exist, and (ii)(More)
We present a theory of production that begins with an exogenously speciied set of technologies, accessible to each potential rm. The technologies used in equilibrium are endogenous. Labor skills are diierentiated, and the labor skills are acquired endogenously by workers, possibly by bearing private costs, and possibly by attending school. A t e c hnology(More)
We consider economies with incomplete markets, one good per state, private ownership of initial endowments, a single firm, and no assets other than shares in this firm. In this simple framework, arbitrarily small income effects can render every market equilibrium resulting from some production decision constrained inefficient. Thus, even if all utility(More)