Charges as equilibrium prices and asset bubbles (Q911437)

This paper is concerned with the issue of the existence of equilibrium with bubbles. Let the commodity space be \(L_{\infty}\), the space of bounded sequences, and the price space be its norm-dual. Then the author studies conditions under which bubbles must exist, or can be tacked on to the equilibrium price. It is shown that a certain kind of patience on the part of consumers, or certain sorts of technological pathologies are sufficient to guarantee the presence of bubbles. This is another important step in the line of theoretical research on asset bubbles although its empirical relevance does not seem so strong.