The existence and efficiency of general equilibrium with incomplete markets under Knightian uncertainty

- We study general equilibrium theory of incomplete markets under Knightian uncertainty.
- The existence of equilibrium is established.
- The equilibrium is shown to be constrained Pareto efficient.

This paper first establishes the existence of equilibrium for an economy with Knightian uncertainty and incomplete markets, and then demonstrates the constrained Pareto efficiency of the equilibrium when there is one commodity only in each state of nature.