General Equilibrium with Endogenous Trading Constraints

Sebastián Cea-Echenique (1, 2, 3) , Juan Pablo Torres-Martínez (4)

1 PSE - Paris School of Economics
2 CES - Centre d'économie de la Sorbonne
3 PUCV - Pontificia Universidad Católica de Valparaíso
4 ESE - Faculty of Economics and Business

In a competitive model where agents are subject to endogenous trading constraints, we make the access to financial trade dependent on prices and consumption decisions. Our framework is compatible with the existence of both credit market segmentation and market exclusion. In this context, we show equilibrium existence in two scenarios. In the first one, individuals can fully hedge the payments of segmented financial contracts by trading unsegmented assets. In the second one, it is assumed that agents may compensate with increments in present demand the losses of well-being generated by reductions of future consumption.

Mots clés: Endogenous Trading Constraints; Incomplete Markets; General Equilibrium

Domaines: Economies et finances; Méthodes et statistiques; Optimisation et contrôle [math.OC]; Analyse fonctionnelle [math.FA]

Sebastián Cea-Echenique, Juan Pablo Torres-Martínez. General Equilibrium with Endogenous Trading Constraints. PLoS ONE, 2018, 13 (9), pp.e0203814. ⟨10.1371/journal.pone.0203814⟩. ⟨halshs-03326792⟩