We show that when bankruptcy, subject to penalties, is allowed, it is possible to prove the existence of equilibrium in a model with a continuum of states without imposing any assumptions on ex-post endowments.

By introducing repo markets we understand how agents need to borrow issued securities before shorting them: (re)-hypothecation is at the heart of shorting. Non-negative amounts of securities in the box of an agent (amounts borrowed or owned but not lent on) can be sold, and recursive use of...

We discuss the issue, raised by Mas-Colell (1991) whether the local uniqueness (relative to the L∞ topology) may be a generic property of equilibria in incomplete markets economies with a continuum of states.

In this paper, we propose a perfect competition test which checks whether arbitrarily small coalitions of firms, which behave strategically on costs, are able to manipulate prices in their own benefit. We apply this test to economies with a continuum of differentiated producers. We show that,...

In the presence of utility penalties, collateral requirements do not always eliminate the occurrence of Ponzi schemes. Harsh utility penalties may induce effective payments over collateral recollection values. In this event, loans can be larger than collateral costs and Ponzi schemes become...