Welfare Consequences of Information Aggregation and Optimal Market Size∗
نویسندگان
چکیده
This paper studies a risk-sharing model where traders face endowment shocks and information asymmetries. We show that a negative participation externality arises due to the endogenous information aggregation by prices, and it creates a counter force to a standard positive externality of risk-sharing. As a result, the optimal market size that maximizes gains from trade per trader is finite. The model indicates that a collection of small markets can be a constrained effi cient market structure. We also study a decentralized process of market formation, and show that multiple markets can survive because of the negative informational externality among traders.
منابع مشابه
Achieving the Optimal Share of Government Expenditures in GDP with the Aim of Maximizing Social Welfare (with Emphasis on the Affairs and Chapters of the Government's Public Budget)
Introduction: Increasing the level of social welfare with access the poor to order and security, education and health services, social security, increase the capacity of the economy in the chapters of agriculture, water and electricity, industries and mines, business, energy, transportation, information technology is possible. Meanwhile, the extent of government presence in how public policies ...
متن کاملAchieving the Optimal Share of Government Expenditures in GDP with the Aim of Maximizing Social Welfare (with Emphasis on the Affairs and Chapters of the Government's Public Budget)
Introduction: Increasing the level of social welfare with access the poor to order and security, education and health services, social security, increase the capacity of the economy in the chapters of agriculture, water and electricity, industries and mines, business, energy, transportation, information technology is possible. Meanwhile, the extent of government presence in how public policies ...
متن کاملThe Economic Impact of Regulatory Information Disclosure on Information Security Investments, Competition, and Social Welfare
The Sarbanes-Oxley legislation is a mandate that is bringing new attention to IT security as a critical part of the risk management framework for the dual purposes of certifying internal controls and attesting to the accuracy of information. Regulatory compliance, security audits and mandatory information disclosure about internal weaknesses can be very costly from a budget standpoint because i...
متن کاملDifferentially Private Local Electricity Markets
Privacy-preserving electricity markets have a key role in steering customers towards participation in local electricity markets by guarantying to protect their sensitive information. Moreover, these markets make it possible to statically release and share the market outputs for social good. This paper aims to design a market for local energy communities by implementing Differential Privacy (DP)...
متن کاملA Welfare Analysis of Wheat Self-Sufficiency Policy and the Influence on the Barley Market in Iran: A Game Theory Approach
ABSTRACT- Iran achieved its self-sufficiency goal in wheat production a few years ago, perhaps at the expense of decreasing the production of other grains specially barley as stated by critics in the country. Considering the dependency of wheat and barley markets on each other, policy preference functions were estimated separately for each market. Incorporating political weights, a game theory ...
متن کامل