Competitive equilibrium with unawareness in economies with production

• 成果类型: Article
• 署名作者: Kawamura, E
• 署名单位: Universidad de San Andres Argentina
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2004.03.005
• 发表日期: 2005
• 页码: 167-191
• 关键词: Unawareness; incomplete markets; INVESTMENT; unforeseen contingencies

摘要

This paper investigates an extension of the GEI-unawareness framework by Modica et al. (Econ. Theory 12 (1998) 259) to economies with entrepreneurial production. Existence of equilibrium is guaranteed given decreasing returns to scale. Firm's value and investment decision in equilibrium are characterized. An example of commodity innovation shows that the effect of different degrees of awareness on investment decisions depend upon the degree of risk aversion. In the case of log preferences unawareness may not matter for commodity innovation, although this depends on other preference features. (c) 2004 Elsevier Inc. All rights reserved.