A Market-Based Solution for Fire Sales and Other Pecuniary Externalities
Name
712787.pdf
Description
Published version
Size
771.56 KB
Format
Adobe PDF
Checksum (MD5)
41e4f9e18a25415c512db2419a43f1f0
Author(s)
Kilenthong, Weerachart T.
Townsend, Robert
Date Issued
March 2021
Journal
Journal of Political Economy
Publisher
University of Chicago Press
Citation
Kilenthong, Weerachart T. and Robert M. Townsend. "A Market-Based Solution for Fire Sales and Other Pecuniary Externalities." Journal of Political Economy 129, 4 (April 2021): 981-1010. © 2021 The University of Chicago
Version
Final published version
Abstract
In economies with a continuum of agents of different types, pecuniary externalities are removed with market exchanges. Agents choose from among various possible prices they want to prevail in the future and buy or sell rights in these market exchanges for future trade. Each agent can choose the exchange it wants without regard to what any other agent is doing. But crucially, the right to trade in each and every exchange is priced. The fee structure has a per-unit price and quantity decomposition: a price, as determined by the exchange chosen, times the quantity of rights acquired.
MIT Department
Sloan School of Management
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1086/712787
