Credit market segmentation,essentiality of commodities,and supermodularity |
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| Institution: | 1. Universidade Nova de Lisboa, FCT and CMA, Portugal;2. Department of Economics, Faculty of Economics and Business, University of Chile, Chile;1. Departamento de Análisis Económico and ERI-CES, University of Valencia, Facultad de Economía, Campus dels Tarongers, 46022 Valencia, Spain;2. D. Mètodes Quantitatius i Teoria Econòmica and Instituto Desarrollo Social y Paz (IUDESP), Universitat d’Alacant, Spain;1. CNRS-University of Cergy-Pontoise (THEMA, UMR 8184), France;2. CNRS-Paris School of Economics (PjSE, UMR 8545), France;1. Department of Quantitative Economics, Maastricht University, Netherlands;2. Economic Research Unit, Indian Statistical Institute, Kolkata, India;1. Korea University, Republic of Korea;2. University of Exeter, United Kingdom |
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| 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. |
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| Keywords: | Credit market segmentation Essential commodities Supermodularity |
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