Implementing Arrow-Debreu equilibria by trading infinitely-lived securities (Q1762757)

The referred paper deals with modifications of Arrow-Debreu equilibrium of dynamic competitive economies extending over infinite time. The modification consists in trading securities by agents in sequential markets at every date in an infinite-time economy. The proper choice of feasibility constraints on agents' portfolio strategies appears to be the crucial aspect of implementation results to infinitely-lived securities. It is related to the possibility of price bubbles in sequential markets. The main results presented in the paper regard the implementability of Arrow-Debreu equilibria with countably additive prices by trading infinitely-lived securities in complete sequential markets under wealt constraints with no price bubbles. These conclusions imply the existence of always sequential equilibria with price bubbles under the wealth constraints if some of the securities are in zero supply. Some attention is paid to another portfolio feasibility constraint regarding the boundedness from below of the value of borrowing at normalized security prices. It is shown that exact implementation of Arrow-Debreu equilibria with countably additive prices holds with essentally bounded portfolia strategies.