Endogenous Transaction Costs
Paper number: 08/10
Paper date: 2008
Paper Category: Working Paper
V. Filipe Martins-Da-Rocha AND Yiannis Vailakis
The paper proposes an alternative general equilibrium formulation of financial asset economies with transactions costs. Transaction costs emerge endogenously at equilibrium and reflect agents decisions of intermediating financial activities at the expense of providing labor services. An equilibrium is shown to exist in the case of real asset structures.