On financial equilibrium with intermediation costs

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  • Tobias Ejnar Markeprand
This paper studies the set of competitive equilibria in financial economies with intermediation costs. We consider an arbitrary dividend structure, which includes options and equity with limited liabilities.We show a general existence result and upper-hemi continuity of the equilibrium correspondence. Finally, we prove that when intermediation costs approach zero, unbounded volume of asset trades is a necessary and sufficient condition, provided that, there is no financial equilibrium without intermediation costs.
Translated title of the contributionOm finansiel ligevægt med transaktionsomkostninger
Original languageEnglish
JournalJournal of Mathematical Economics
Volume44
Issue number2
Pages (from-to)148-156
Number of pages8
ISSN0304-4068
DOIs
Publication statusPublished - 2008

ID: 6529632