Credit market segmentation, essentiality of commodities, and supermodularity

Abstract

We consider incomplete market economies where agents are subject to price-dependent trading constraints compatible with credit market segmentation. Equilibrium existence is guaranteed when either commodities are essential, i.e, indi erence curves through individuals' endowments do not intersect the boundary of the consumption set, or utility functions are concave and supermodular. Since we do not require the smoothness of mappings representing preferences, nancial promises, or trading constraints, our approach is compatible with the existence of ambiguity-adverse agents, non-recourse collateralized loans, or income-dependent thresholds determining the access to credit