Primary and Secondary Markets

Abstract

The present paper swaps the standard behavioral axioms for structural axioms and applies the latter to the analysis of the emergence of secondary markets from the flow part of the economy. Real and nominal residuals at first give rise to the accumulation of the stock of money and the stock of commodities. This stocks constitute the demand and supply side of secondary markets. The pricing in these markets is different from the pricing in the primary markets. Winnings are different from income or profits. The emergence of secondary markets implies that the plans of households and firms are mutually incompatible.