Trade using assets divisible at a cost

Ramon Marimon, Neil Wallace

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


The consequences of costly divisibility of assets are studied using a model with the following features. The demand for assets is generated from an overlapping generations model with a continuum of agents in each generation and with intrageneration trade (intermediation) ruled out. There is a once-for-all supply of a stock of nonnegative-dividend assets in a large size, and there is a costly technology for dividing them into smaller sizes. Stationary equilibria are shown to exist. In contrast with similar models with costless divisibility of assets, competitive equilibria are not necessarily desirable; there can be Pareto-ordered equilibria.

Original languageEnglish (US)
Pages (from-to)223-251
Number of pages29
JournalJournal of Economic Theory
Issue number2
StatePublished - Dec 1987

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


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