Economic Theory

, Volume 54, Issue 2, pp 287–304

Risk sharing and retrading in incomplete markets

Research Article

DOI: 10.1007/s00199-012-0717-z

Cite this article as:
Gottardi, P. & Rahi, R. Econ Theory (2013) 54: 287. doi:10.1007/s00199-012-0717-z


At a competitive equilibrium of an incomplete-markets economy agents’ marginal valuations for the tradable assets are equalized ex-ante. We characterize the finest partition of the state space conditional on which this equality holds for any economy. This leads naturally to a necessary and sufficient condition on information that would induce agents to retrade, if such information was to become publicly available after the initial round of trade.


Competitive equilibrium Incomplete markets Information Retrading 

JEL Classification

D52 D80 

Copyright information

© Springer-Verlag 2012

Authors and Affiliations

  1. 1.Department of EconomicsEuropean University InstituteFlorenceItaly
  2. 2.Dipartimento di Scienze EconomicheUniversità di VeneziaVeneziaItaly
  3. 3.Department of Finance and Financial Markets GroupLondon School of EconomicsLondonUK

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