Valuation Equilibria with Transactions Costs
Posted: 22 Jul 1998
Date Written: Not Provided
This paper studies economic environments with transactions technology. It shows that a simple redefinition of the commodity space allows these environments to be studied as instances of Debreu's valuation equilibrium. Thus, results from standard general equilibrium theory, namely, proof of existence of competitive equilibrium, and the First and Second Welfare Theorems are applicable. These results should provide a firm foundation for the quantitative study of resource allocation in the presence of transactions costs. The views expressed here are those of the authors and do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.
JEL Classification: D23, D58
Suggested Citation: Suggested Citation