The coordinating role of a redundant security is its role in markets with transaction costs to coordinate different consumers’ security demands so as to clear all security markets and, simultaneously, attain a given commodity allocation. The purpose of this paper is to prove that, under some...

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 five securities and three...