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The Relevance of Extrinsic Uncertainty

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Abstract

When the asset market is incomplete extrinsic risk is effective at competitive equilibrium allocations; this is the case whether commodities are exchanged indirectly, through the exchange of assets, or whether assets serve to transfer revenue and commodities are exchanged in spot markets. Individuals bear extrinsic risk for the benefit of exchanging commodities or transferring revenue in the absence of complete markets for the allocation of intrinsic risk.
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Dates and versions

hal-00598239 , version 1 (05-06-2011)

Identifiers

  • HAL Id : hal-00598239 , version 1

Cite

Heracles M. Polemarchakis, Luigi Ventura. The Relevance of Extrinsic Uncertainty. 2000. ⟨hal-00598239⟩

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