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| Author: | Cooley, T. Smith, B. |
| Title: | Indivisible assets, equilibrium, and the value of intermediation |
| Journal: | Journal of Financial Intermediation
1995 : JAN, VOL. 4:1, p. 48-76 |
| Index terms: | ASSETS TRANSACTION COSTS MODELS |
| Language: | eng |
| Abstract: | This paper considers a standard monetary economy with indivisible primary assets and transaction costs. When assets are indivisible, if a steady-state equilibrium with positive savings exists , there necessarily exists a very large set of equilibria. The intermediation of indivisible assets substantially reduces the set of competitive equilibria, and enhances the "flexibility" of prices. The authors state sufficient conditions for intermediaries to form and hold all primary assets directly. |
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