Existence of Financial Equilibria in a General Equilibrium Model with Piece-Wise Smooth Production Manifolds

Abstract

This paper considers a general equilibrium model with production and uncertainty. It is postulated that the firm finances its production capacity through the stock market and that its operational costs are covered through revenues. It is assumed that firms have linear technologies exhibiting constant returns to scale. Their production sets are piece-wise smooth convex manifolds. By method of regularization, it is shown using transversally theory that financial equilibria exists.