Question

Discuss what market completness really is

Discuss what market completness really is

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Answer #1

Complete Market is one in which the complete set of possible gambles on future states of the world can be constructed with existing assets without friction.A complete set of market is one in hich there is a market for every good.The theory of complete market is an important element of modern theoretical economics can provide some insights.

In real sense complete market is a system of markets which are not complete as we shall see.The notion of completeness,however,is of interest for two reasons.First,it serves as a theoretical benchmark relative to which completeness can be assigned, such a comparison might,for example suggest whether incompleteness implies inefficiency in a particular model.Secondly,although the notion of market completeness appears most often in theoretical discussions,the ideas involved can also be applied to more realistic problems.

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