Uncertain delivery in markets for lemons
نویسنده
چکیده
The notion of uncertain delivery is extended to study exchange economies in which agents have different abilities to distinguish between goods (for example a car in good condition versus a car in bad condition). In this setting, it is useful to distinguish goods not only by their physical characteristics, but also by the agent that is bringing them to the market. Equilibrium is shown to exist, and characterized by the fact that agents always receive the cheapest bundle among those that they cannot distinguish from truthful delivery. Several examples are presented as an illustration.
منابع مشابه
The "Lemons" Problem in C2C Markets
Asymmetric information and adverse selection widely exist in used product markets. However, current C2C markets have two significant features: dynamic online evaluation system and “smarter” buyers (defined as customers with more prior information). In our primary analysis on the first feature, we find that higher quality used items are available in C2C markets and the size of the markets become...
متن کاملImperfect Competition and Efficiency in Lemons Markets
This paper studies the impact of competition on the degree of inefficiency in lemons markets. More precisely, we characterize the second-best mechanism (i.e., the optimal mechanism with private information) in a stylized lemons market with finite numbers of buyers and sellers. We then study the relationship between the degree of efficiency of the second-best mechanism and market competitiveness...
متن کاملDynamic markets for lemons: Performance, liquidity, and policy intervention
Even%though%adverse%selection%pervades%markets%for%real%goods%and%financial%assets,% equilibrium%in%such%markets%is%not%well%understood.%What%are%the%properties%of%equilibrium% in%dynamic%markets%for%lemons?%What%determines%the%liquidity%of%a%good?%Which%market% structures%perform%better,%decentralized%ones,%in%which%trade%is%bilateral%and%prices%are% negotiated,%or%centralized%ones,%in%which%t...
متن کاملOnline Supplementary Appendix to: Dynamic Markets for Lemons: Performance, Liquidity, and Policy Intervention
متن کامل
The In uence of Informed Buyers in Markets Susceptible to the Lemons Problem
I show that the presence of informed buyers is necessary but not always su cient for producers to use prices as signals of product quality. A su ciently high fraction of informed buyers eliminates the lemons problem. A small fraction of informed buyers mitigates the lemons problem, provided that buyers' prior belief of high quality is su ciently pessimistic : price reveals high quality at a sig...
متن کامل