Dynamic Trading in a Durable Good Market with Asymmetric Information* by Maarten
نویسندگان
چکیده
We analyze a dynamic version of the Akerlof±Wilson ``lemons'' market in a competitive durable good setting. There is a ®xed set of sellers with private information about the quality of their wares. The price mechanism sorts sellers of different qualities into different time periodsÐprices and average quality of goods traded increase over time. Goods of all qualities are traded in ®nite time. Market failure arises because of the waiting involvedÐparticularly for sellers of better quality. The equilibrium path may exhibit intermediate breaks in trading.
منابع مشابه
Buyer Heterogeneity and Dynamic Sorting in Markets for Durable Lemons∗
In a durable good market where sellers have private information about quality, I identify certain problems in dynamic trading and sorting that arise in the presence of heterogeneity among buyers. Higher valuation buyers may have have lower incentive to wait to buy better quality at a later time period. As a result, even though higher quality sellers may wait to sell later at higher prices and d...
متن کاملDynamic Trading in a Durable Good Market with Asymmetric Information*
We investigate the nature of market failure due to adverse selection in competitive markets for durable goods where price-taking traders have the option of waiting to trade. The framework is a dynamic version of Akerlof (1970). There is a given set of potential sellers and goods. Valuations of both buyers and sellers depend on quality and information about quality is privately held by sellers. ...
متن کاملاندازه گیری سطح عدم تقارن اطلاعات برای شرکت های منتخب فعال در بورس اوراق بهادار تهران: احتمال مبادله آگاهانه(PIN)
The level of asymmetric information in financial markets is important for its impact on the market formation, price levels and its interaction with investment risk. Also, determining the optimal rules by policy makers and determining the trading strategy by investors is done according to the level of information symmetry in the market. In financial literature, many metrics have been developed t...
متن کاملContinuous Time Trading in Markets with Adverse Selection
We investigate the nature of the adverse selection problem in a market for a durable good where trading and entry of new buyers and sellers takes place in continuous time. In the continuous time model equilibria with properties that are qualitatively different from the static equilibria, emerge. Typically, in equilibria of the continuous time model sellers with higher quality wait in order to s...
متن کاملDynamic sorting in durable goods markets with buyer heterogeneity
In a competitive dynamic durable good market where sellers have private information about quality, I identify certain ineffi ciencies that arise due to heterogeneity in buyers’ valuations. Even if the market induces dynamic sorting among sellers and all goods are eventually traded, ineffi ciency can arise because high valuation buyers buy early when low quality goods are sold, while high qualit...
متن کامل