Endogenized Production Sets in a General Equilibrium Model with Incomplete Markets

The paper develops a general equilibrium model with incomplete markets where the asset structure is endogenized. This asset structure allows to consider a new class of objective functions of profit maximizing firms. This class of objective functions is independent of the utilities of the stock holders. Corporate equilibrium properties are studied for this model. It is shown that the organization of production is generally efficient. This result is a consequence of the generalization of the separation theorem of the Arrow-Debreu model to incomplete markets. Finally, the paper shows that corporate equilibria are not independent of the firms financial activities.