Strategic Behavior of Firms in Incomplete Markets

• Applicant: Michael Zierhut, Ph.D.
• Subject Area: Economic Theory
• Term: from 2017 to 2020
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 346629185

In general equilibrium models with incomplete markets, decisions of firms determine the possible transfers of consumption across time and states of the world. This gives the firm market power. However, strategic behavior of firms is still one of the greatest research gaps in general equilibrium theory. The focus of this project is on firms with multiple marketable contracts, such as financial intermediaries or companies with different forms of finance. The aim is to model oligopolistic competition between such firms in a general equilibrium framework. This includes the study of existence, properties, and optimality of equilibrium. In particular, the set of offered contracts and the real effects on decisions of individuals shall be analyzed. Besides consumption decisions this includes strategic acquisition of shares to gain influence in the firm.

• DFG Programme: Research Grants
• Co-Investigator: Professor Dr. Alex Stomper