On financial equilibrium with intermediation costs |
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Authors: | Tobias Markeprand |
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Institution: | University of Copenhagen, Department of Economics, Studiestraede 6, 1455 Copenhagen K, Denmark |
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Abstract: | 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. |
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Keywords: | D52 D53 D41 |
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