0 an amount of goods that a company keeps for use in the future:
Warehousing and other stockholding costs will be high.
1 the shares that someone owns in a particular company, or in companies in general:
Thus, the range of stockholding function is wider with short sale than without.
However, its impact increases drastically when the beginning-of-period stockholdings approach the two end points.
For instance, for = 10, stockholdings are 117% of income and bond holdings are 28% of income.
The horizontal axis is an agent's stockholdings at the beginning of the period.
Unlike consumption and stockholdings, stock prices are not monotonic functions of beginning-of-period stockholdings.
The intuition behind this is that, when agents' stockholdings approach the end points, the wealth distribution among agents can be very uneven.
The lower bound on agents' stockholdings is determined when the equilibrium is found.
For every exogenous state, an agent's consumption for both economies is an increasing function of her beginning-of-period stockholdings.
