COMMISSION-REVENUE MAXIMATION IN A GENERAL EQUILIBRIUM-MODEL OF ASSET CREATION

A general equilibrium model of endogenous asset formation is given in which a monopolistic agent, called the designer, can create any types of assets and charage commissions as long as the total number of the types of assets does not exceed some given constant. When the designer can create at most two assets, a commission-revenue maximizer always exists. Otherwise, it may not. Moreover, the so-called epsilon-maximizers may be badly behaved. A (profit) maximizer may not exist even when the number of types of assets is endogenously determined from a positive fixed cost of creating an asset. Journal of Economic Literature Classification Numbers: D52, D80. (C) 1995 Academic Press, Inc.