A stock market is a mechanism by which the ownership and control of ﬁrms is determined through the trading of securities. It is on this market that many of the major risks faced by society are shared through the exchange of securities and the production decisions that influence the present and future supply of resources are determined. If the overall structure of markets is incomplete can the stock market be expected to perform its role of exchanging risks and allocating investment eﬀiciently? It is this question that we seek to answer.
Geanakoplos, John; Magill, Michael; Quinzii, Martine; and Dréze, Jacques, "Generic Inefficiency of Stock Market Equilibrium When Markets Are Incomplete" (1988). Cowles Foundation Discussion Papers. 1106.