TITLE:
Production in General Equilibrium with Incomplete Financial Markets
AUTHORS:
Pascal Stiefenhofer
KEYWORDS:
General Equilibrium, Incomplete Financial Markets, Production, Existence of Equilibria, Transversality
JOURNAL NAME:
Journal of Mathematical Finance,
Vol.6 No.2,
May
13,
2016
ABSTRACT: This paper considers a general equilibrium model with incomplete financial markets where production sets depend on the financial decisions of the firms. In the short run, firms make financial choices in order to build up production capacity. Given production capacity firms make profit maximizing production decisions in period two. We provide the conditions of existence of equilibria.