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| Author: | Elul, R. |
| Title: | Welfare-improving financial innovation with a single good |
| Journal: | Economic Theory
1999 : VOL. 13:1, p. 25-40 |
| Index terms: | WELFARE FINANCIAL INNOVATION PRODUCTION |
| Language: | eng |
| Abstract: | The authors show that at any equilibrium of almost every single-good incomplete markets economy, it is possible to find an asset which when introduced makes every agent better-off. Diamond (1967) has shown, however, that such economies are constrained suboptimal, so it is of course impossible to find a new asset which makes all agents worse-off. This contrasts with the case of multiple consumption goods, for which Cass and Citanna and Elul demonstrate that equilibrium utilities may be arbitrarily perturbed via financial innovation. |
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