Search results for "Partial equilibrium"
showing 4 items of 4 documents
A Partial Equilibrium Model of Option Markets
2000
This paper addresses the questions who is buying and who is selling options on a stock, the optimal position to hold, and how this affects the price. The individual demand functions and the equilibrium allocation are derived using an asymptotically valid expansion. Trading occurs only at discrete dates; the option does not have to complete the market. The paper also discusses the conditions under which trade results, the importance of heterogeneity for trade, when preferences become irrelevant to price options, and the case in which there is only a spanning demand, but no risk-sharing demand in options.
Stackelberg-Walras and Cournot-Walras equilibria in mixed markets: a comparison
2012
In this note, we compare two strategic general equilibrium concepts: the Stackelberg-Walras equilibrium and the Cournot-Walras equilibrium. We thus consider a market exchange economy embodying atoms and a continuum of traders. It is shown that, when the preferences of the small traders are represented by Cobb-Douglas utility functions, the Stackel-berg-Walras and the Cournot-Walras equilibria can coincide only if 1) the endowments and preferences of atoms are identical and 2) the elasticity of the followers’ best response functions are equal to zero in equilibrium.
An appraisal of Piero Sraffa's 'The Laws of Returns under Competitive Conditions'
2001
The paper proposes a new interpretation of Sraffa's 1926 Economic Journal article, ‘The Laws of Returns under Competitive Conditions’, according to which the latter derives from the same strategy of research which underlies its 1925 Italian precursor, ‘Sulle relazioni fra costo e quantità prodotta’. Sraffa tested the explanatory power of a Marshallian monopolistic partial equilibrium model and concluded that that model is able to treat one source of variable returns (firm-internal economies); but this articulation of Marshall‘s theory does not substantially improve on the trade-off between logical consistency and empirical relevance which afflicted the theory in its whole. © 2001, Taylor & …
Method and analysis in Piero Sraffa's 1925 critique of Marshallian economics
2000
This paper provides an analysis of the logical structure and analytical content of Piero Sraffa's 1925 Italian paper, ‘Sulle relazioni fra costo e quantita prodotta’. It shows that Sraffa's criticism of the supply side of Marshall's theory of value in a competitive partial equilibrium model involves analytical and methodological issues. Endorsing an agressive methodology Sraffa logically reconstructs Marshall's model on variable returns to determine its empirical domain. He demonstrates that the latter encompasses only the empirically irrelevant cases of specific factor industries and specific external economies industries and that it cannot be generalized to non-specific factor industries …