Walrasian foundations for equilibria in segmented markets
Rahi, R.
& Zigrand, J.
(2014).
Walrasian foundations for equilibria in segmented markets.
Mathematics and Financial Economics,
8(3), 249 - 264.
https://doi.org/10.1007/s11579-014-0114-4
& Zigrand, J.
(2014).
Walrasian foundations for equilibria in segmented markets.
Mathematics and Financial Economics,
8(3), 249 - 264.
https://doi.org/10.1007/s11579-014-0114-4
We study a CAPM economy with segmented financial markets and competitive arbitrageurs who link these markets. We show that the equilibrium of the arbitraged economy is Walrasian in the sense that it coincides with the equilibrium of an appropriately defined competitive economy with no arbitrageurs. This characterization serves to clarify the role that arbitrageurs play in integrating markets.