Publisher's Synopsis
Franklin Allen and Douglas Gale's work has included the study of financial innovation, developing economic models to address the question of whether the market provides institutions and opportunities for individuals to share risks efficiently. In this book the authors assemble some of their key papers along with a five-chapter overview that synthesizes their work and provides a historical and institutional review and also a discussion of alternative approaches.;The overview surveys the authors' approach to financial innovation, principally their development of a basic theory of risk sharing in an economy with incomplete markets. The first two chapters summarize the history of innovation and illustrate the types of innovation, innovators, and motives for innovation. Chapters three and four look at industrial organization approaches to innovation and outline the authors' theory. The fifth chapter discusses other approaches and an agenda for future research.
