This short paper resolves an apparent contradiction between Feldman’s (1989) and Riedel’s (2000) equilibrium models of the term structure of interest rates under incomplete information. Feldman (1989) showed that in an incomplete information version of Cox, Ingersoll, and Ross (1985), where the stochastic productivity factors are unobservable, equilibrium term structures are “interior” and boun...

This paper derives the price system in a model of decentralized bilateral exchange. Out of equilibrium, prices are individual subjective estimates of payoff-maximizing exchange ratios, and hence are the private information of individual agents. We show that a system of public prices emerges in the long run, and these public prices are equilibria of the underlying general equilibrium model. We t...

Extending the notion of contractual pricing introduced by Makowski and Ostroy (2003) to economies with moral hazard, this paper develops a model of team formation and organized competition with three main contributions. Firstly, a team’s organization is defined as an allocation of (public or private) commodities together with incentive compatible actions and information to its members. Secondly...

The main contribution of the paper is to provide a weaker nonsatiation assumption than the one commonly used in the literature to ensure the existence of competitive equilibrium. Our assumption allows for satiation points in the set of individually feasible consumptions, provided that the consumer has satiation points available to him outside this set. As a result, we show the concept of equili...

Using private information and club theories, this paper develops a theory of ...rms in general equilibrium. Firms are de...ned to be assignments of technologies and agents to clubs. In equilibrium, ...rms form endogenously and multiple types may coexist. We formulate the general equilibrium problem as both a Pareto program and as a competitive equilibrium. Welfare and existence theorems are pro...

Canonical analysis of the classical general equilibrium model demonstrates the existence of an open and dense subset of standard economies that possess fully-revealing rational expectations equilibria. This paper shows that the analogous result is not true in urban economies under reasonable modifications for this field. An open subset of economies where none of the modified rational expectatio...

In a New Monetarist framework, we study the trade of indivisible goods under credit, divisible money and divisible asset in a frictional market. We show how indivisibility on the goods side, instead of the money or asset side, matters for equilibria. The bargaining solution generates a price that is independent of nominal interest rate, dividend value of the asset, or the number of active buyer...

Competition among banks promotes growth and stability for an economy with production externality. Following Arrow and Debreu (1954) [6], I formulate a standard growth model with externality—a twoperiod version of Romer (1986) [39]—as a game among consumers, firms, and intermediaries. The Walrasian equilibrium, with an auctioneer, does not achieve the social optimum. Without an auctioneer or int...

We consider an exchange economy in which agents possess private information at the time of engaging in state contingent contracts. While communication of private information is permitted, the true information state is not verifiable. The enforcement of contracts is, therefore, limited by incentive compatibility constraints. We formalize a notion of the core for such an economy. Our analysis can...

A number of recent papers have studied the finite temperature properties of ferromagnetic quantum spin chains. At low temperatures, macroscopic observables can be fully described by two dimensionful parameters which characterize the ground state. A convenient choice for these is the ground-state magnetization density M 0 , and the ground-state spin stiffness rs . Then the macroscopic properties...