Economic Theory

, Volume 45, Issue 1, pp 65–97

Financial markets with endogenous transaction costs


DOI: 10.1007/s00199-009-0498-1

Cite this article as:
Martins-da-Rocha, V.F. & Vailakis, Y. Econ Theory (2010) 45: 65. doi:10.1007/s00199-009-0498-1


The paper proposes an alternative general equilibrium formulation of financial asset economies with transaction costs. Transaction costs emerge endogenously at equilibrium and reflect agents’ decisions of intermediating financial activities at the expense of providing labor services.


Competitive equilibriumIncomplete marketsEndogenous transaction costs

JEL Classification


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© Springer-Verlag 2009

Authors and Affiliations

  1. 1.Graduate School of EconomicsGetulio Vargas FoundationRio de JaneiroBrazil
  2. 2.Department of EconomicsUniversity of Exeter Business SchoolExeterUK