Book contents
- Frontmatter
- Contents
- List of illustrations
- Foreword
- Preface
- Table of notation
- A Getting started
- B An economy with bounded production technology, supply and demand functions
- C An economy with unbounded production technology, supply and demand functions
- D Welfare economics
- E Bargaining and equilibrium: The core
- F The scope of markets
- 15 Time and uncertainty: Futures markets
- G An economy with supply and demand correspondences
- H Conclusion
- Bibliography
- Index
15 - Time and uncertainty: Futures markets
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- List of illustrations
- Foreword
- Preface
- Table of notation
- A Getting started
- B An economy with bounded production technology, supply and demand functions
- C An economy with unbounded production technology, supply and demand functions
- D Welfare economics
- E Bargaining and equilibrium: The core
- F The scope of markets
- 15 Time and uncertainty: Futures markets
- G An economy with supply and demand correspondences
- H Conclusion
- Bibliography
- Index
Summary
Introduction
We have already demonstrated the existence and efficiency of general equilibrium in an economy of N goods with active markets for trading them. But what are these N goods? The answer is that they could be anything. This generality reflects the distinctive power of mathematical modeling. The model and its interpretation are separate. We have a mathematical model that provides a general family of results based on mathematical relations among the variables. How we label the variables and interpret the results is now up to us. The model could apply to trading mineral samples at annual meetings of an amateur gemologists society. It can apply to the trading and production of a small closed economy. It can apply to trading and production of an entire world economy. In each case, of course, it applies only if the assumptions of the model are fulfilled. What we know in each instance is that if the assumptions of the model are fulfilled then the conclusions follow: There will be market clearing prices that lead to a Pareto efficient allocation. This is true whether the prices and allocations are for rock samples, the goods available in a small economy, or those available throughout the world. We have left until now a more complete discussion of the range of goods to be allocated by the market mechanism.
The simplest economic models take no explicit account of time. Thus, the model of Chapters 3–14 covers a simple one-period model where all allocation is at a single date. Equivalently, it covers a static, steady-state economy with no intertemporal trade.
- Type
- Chapter
- Information
- General Equilibrium TheoryAn Introduction, pp. 177 - 196Publisher: Cambridge University PressPrint publication year: 1997