<p>There are a bunch of examples for incomplete markets in the finance literature.  The oldest (that I know of) is <a href="https://doi.org/10.1016/0022-0531(75)90028-9" rel="nofollow noreferrer">Hart (1975)</a>.  In finance, the problem is that if you have two different assets they have different prices that make the market complete.  But then equilibrium considerations make them have the same price, which forces the market to no longer be complete.  (If the market was complete, then they would have the same price.)</p>

CC BY-SA 4.0
2020-10-21T12:33:20.240Z
2020-10-21T15:31:57.347Z
2020-10-21T15:31:57.347Z
arsmath
<p>There are &quot;missing markets&quot; such as in the case of pollution.  We can try to create a price by charging fines against polluters, but no natural price exists.</p>

CC BY-SA 4.0
2020-10-20T19:04:29.837Z
2020-10-20T19:04:29.837Z
RegressForward
<p>Often we employ the use of the separating hyperplane theorem to prove existence of price vectors, when discussing infinite economies this proof is substituted for proving existence of linear functionals.</p>
<p>This all being said, I find it difficult to see a case in consumer theory, producer theory and general equilibrium where we cant have a price vector (unless the problem is a planners problem).</p>
<p>To clarify I'm asking in what mathematical environments do prices not exist and what would their economic interpretation be.</p>

CC BY-SA 4.0
2020-10-20T19:23:57.763Z
From a generic mathematics standpoint, lack of uniqueness also poses issues, and not just existence. If a mathematical problem has an infinite number of solutions, it is possible that no numerical algorithm would converge to any of them. Although multiple equilibria is a concern in economics, not sure whether that issue shows up (if the equilibria are separated, no effect on convergence).
Brian Romanchuk
CC BY-SA 4.0
2020-10-20T21:37:58.700Z
@BrianRomanchuk I agree, but the way I understand price is as a numerical condition of transaction. When we have an infinite number of solutions we have an infinite set of conditions. Qualitatively im asking what is the mathematical structure of problems where people are unable to transact.
EconJohn
CC BY-SA 4.0
2020-10-21T09:12:15.020Z
"...the separating hyperplane theorem..."---non-existence of separating hyperplanes would (trivially) imply non-existence of equilibrium price. E.g. one can drop the convexity assumptions and get a counterexample (Edgeworth box with non-convex preferences).
Michael
CC BY-SA 4.0
2020-10-21T20:54:51.720Z
I have no idea what this question is supposed to be about.
Michael Greinecker
CC BY-SA 4.0
2020-10-21T22:54:49.260Z
@MichaelGreinecker what are the mathematical and economic conditions where a price vector does not exist.
EconJohn
CC BY-SA 4.0
2020-10-22T01:35:31.367Z
@EconJohn: I think you should be more clear about what you're asking (or expecting from an answer). The existence of (equilibrium) price as a mathematical condition is substantively different from the existence of price as an economic institution whereby payments for goods and services are measured. Brian and Michael's comments address the former interpretation of your question and most of the current answers address the latter interpretation. The divergence in these responses also suggests that there is ambiguity in the question as is.
Herr K.
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2020-10-22T03:49:41.927Z
@HerrK. Edited. Thank you for the feedback
EconJohn
CC BY-SA 4.0
2020-10-22T03:50:17.197Z
@Michael I think this is an answer im seeking. Post it formally as one
EconJohn
<microeconomics><mathematical-economics>
When do prices not exist?
EconJohn
# When do prices not exist?

(Asked by: username_0 on 2020-10-20)

Often we employ the use of the separating hyperplane theorem to prove existence of price vectors, when discussing infinite economies this proof is substituted for proving existence of linear functionals.

This all being said, I find it difficult to see a case in consumer theory, producer theory and general equilibrium where we cant have a price vector (unless the problem is a planners problem).

To clarify I'm asking in what mathematical environments do prices not exist and what would their economic interpretation be.

**Tags:** microeconomics, mathematical-economics

> **Comments:**
> **username_1**: From a generic mathematics standpoint, lack of uniqueness also poses issues, and not just existence. If a mathematical problem has an infinite number of solutions, it is possible that no numerical algorithm would converge to any of them. Although multiple equilibria is a concern in economics, not sure whether that issue shows up (if the equilibria are separated, no effect on convergence).  
> **username_0**: @BrianRomanchuk I agree, but the way I understand price is as a numerical condition of transaction. When we have an infinite number of solutions we have an infinite set of conditions. Qualitatively im asking what is the mathematical structure of problems where people are unable to transact.  
> **username_2**: "...the separating hyperplane theorem..."---non-existence of separating hyperplanes would (trivially) imply non-existence of equilibrium price. E.g. one can drop the convexity assumptions and get a counterexample (Edgeworth box with non-convex preferences).  
> **username_3**: I have no idea what this question is supposed to be about.  
> **username_0**: @username_2Greinecker what are the mathematical and economic conditions where a price vector does not exist.  
> **username_4**: @username_0: I think you should be more clear about what you're asking (or expecting from an answer). The existence of (equilibrium) price as a mathematical condition is substantively different from the existence of price as an economic institution whereby payments for goods and services are measured. Brian and username_2's comments address the former interpretation of your question and most of the current answers address the latter interpretation. The divergence in these responses also suggests that there is ambiguity in the question as is.  
> **username_0**: @HerrK. Edited. Thank you for the feedback  
> **username_0**: @username_2 I think this is an answer im seeking. Post it formally as one  

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## 2 answers

### Answer by username_5 on 2020-10-21. Score: 3

There are a bunch of examples for incomplete markets in the finance literature. The oldest (that I know of) is [Hart (1975)](https://doi.org/10.1016/0022-0531(75)90028-9). In finance, the problem is that if you have two different assets they have different prices that make the market complete. But then equilibrium considerations make them have the same price, which forces the market to no longer be complete. (If the market was complete, then they would have the same price.)


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### Answer by username_6 on 2020-10-20. Score: 1

There are "missing markets" such as in the case of pollution. We can try to create a price by charging fines against polluters, but no natural price exists.


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