Credit Rating Agencies and Speedy Payday Loans INTERNATIONAL RESOURCE ALLOCATION: Trade with Incomplete Information 4 INTERNATIONAL RESOURCE ALLOCATION: Trade with Incomplete Information 3 INTERNATIONAL RESOURCE ALLOCATION: Trade with Incomplete Information 2

Archive for March, 2015

INTERNATIONAL RESOURCE ALLOCATION: Trade with Incomplete Information 4

INTERNATIONAL RESOURCE ALLOCATION: Trade with Incomplete Information 4

Proposition 3 implies that only a non-integrated equilibrium is possible for L/L* > L/L*. We can show that this equilibrium exists and is unique given L, L*, i.e., that for eveiy L,L* such that...

INTERNATIONAL RESOURCE ALLOCATION: Trade with Incomplete Information 3

INTERNATIONAL RESOURCE ALLOCATION: Trade with Incomplete Information 3

Our model admits of two types of equilibria, integrated and non-integrated, where we define an integrated equilibrium (IE) as an equilibrium in which w = w* and a non-integrated equilibrium (NIE) as...

INTERNATIONAL RESOURCE ALLOCATION: Trade with Incomplete Information 2

INTERNATIONAL RESOURCE ALLOCATION: Trade with Incomplete Information 2

The probability of a successful match equals 1 for z, = 0, and, if i|r is smaller than 1, declines as \zt\ rises, becoming constant at 1/2 for all |z,|’s higher than (l-i|;)/2: only when an...

INTERNATIONAL RESOURCE ALLOCATION: Trade with Incomplete Information

INTERNATIONAL RESOURCE ALLOCATION: Trade with Incomplete Information

This last qualification is necessary because equilibrium returns are defined with respect to distance from the median: if the distribution of types has a gap in the immediate neighborhood of the...

INTERNATIONAL RESOURCE ALLOCATION: Trade with Incomplete Information 5

INTERNATIONAL RESOURCE ALLOCATION: Trade with Incomplete Information 5

In Proposition 3 and its proof we saw that the operation of the price mechanism brings about full efficiency or maximum world income when L/L* ^ L/L*. When a NIE obtains, we can make the weaker...