Investment incentives in bilateral trading
نویسنده
چکیده
a r t i c l e i n f o a b s t r a c t JEL classification: C72 C78 D44 D82 Keywords: Bilateral trading k-Double auctions Incomplete contracts Investment incentives Optimal mechanism Opt-out clause We characterize the surplus-maximizing trading mechanism under two-sided incomplete information and interim individual rationality, when one party can make a value-enhancing specific investment. This mechanism exhibits a trade-off between providing investment incentives and inducing voluntary participation. We analyze how the trading area of the optimal mechanism is further distorted in order to provide investment incentives. Applications of our main results and the underlying geometric analysis to institutional design issues are also provided.
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ورودعنوان ژورنال:
- Games and Economic Behavior
دوره 73 شماره
صفحات -
تاریخ انتشار 2011