The Coordinating Role of a Redundant Security in Frictional Markets.

In this paper, we show that even if a redundant security does not have the cost-saving role in markets with transaction costs, it may still be relevant to risk-sharing at equilibrium. We call this the coordinating role of the redundant security. We prove that at least 5 securities and 3 states are necessary for one of the securities to have the coordinating role.

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Year of publication:	1997
Authors:	Hara, C.
Institutions:	Center for Operations Research and Econometrics (CORE), École des Sciences Économiques de Louvain
Subject:	FINANCIAL MARKET

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Series:	Papers.
Type of publication:	Book / Working Paper
Notes:	25 pages
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005669333