In this paper we examine the problem of dynamic adverse selection in a stylized market where the quality of goods is a seller's private information while the realized distribution of qualities is public information. We obtain that full trade occurs in every dynamic competitive equilibrium. Moreover, we show that if prices can be conditioned on the supply size then a dynamic competitive equilibrium always exists, while it fails to exist if prices cannot be conditioned on the supply size and the frequency of exchanges is high enough. We conclude that the possibility to condition prices on the supply size allows to reach efficiency in the limit for exchanges becoming more and more frequent, while otherwise the welfare loss due to delays of exchanges remains bounded away from zero.

Dynamic Adverse Selection and the Supply Size / Bilancini, Ennio; Boncinelli, Leonardo. - In: EUROPEAN ECONOMIC REVIEW. - ISSN 0014-2921. - STAMPA. - 83:(2016), pp. 233-242. [10.1016/j.euroecorev.2016.01.002]

Dynamic Adverse Selection and the Supply Size

BILANCINI, Ennio;
2016

Abstract

In this paper we examine the problem of dynamic adverse selection in a stylized market where the quality of goods is a seller's private information while the realized distribution of qualities is public information. We obtain that full trade occurs in every dynamic competitive equilibrium. Moreover, we show that if prices can be conditioned on the supply size then a dynamic competitive equilibrium always exists, while it fails to exist if prices cannot be conditioned on the supply size and the frequency of exchanges is high enough. We conclude that the possibility to condition prices on the supply size allows to reach efficiency in the limit for exchanges becoming more and more frequent, while otherwise the welfare loss due to delays of exchanges remains bounded away from zero.
2016
83
233
242
Dynamic Adverse Selection and the Supply Size / Bilancini, Ennio; Boncinelli, Leonardo. - In: EUROPEAN ECONOMIC REVIEW. - ISSN 0014-2921. - STAMPA. - 83:(2016), pp. 233-242. [10.1016/j.euroecorev.2016.01.002]
Bilancini, Ennio; Boncinelli, Leonardo
File in questo prodotto:
File Dimensione Formato  
biboscreen_walrasian_EER_final.pdf

Accesso riservato

Tipologia: Versione dell'autore revisionata e accettata per la pubblicazione
Dimensione 436.97 kB
Formato Adobe PDF
436.97 kB Adobe PDF   Visualizza/Apri   Richiedi una copia
Pubblicazioni consigliate

Licenza Creative Commons
I metadati presenti in IRIS UNIMORE sono rilasciati con licenza Creative Commons CC0 1.0 Universal, mentre i file delle pubblicazioni sono rilasciati con licenza Attribuzione 4.0 Internazionale (CC BY 4.0), salvo diversa indicazione.
In caso di violazione di copyright, contattare Supporto Iris

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11380/1082629
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 1
  • ???jsp.display-item.citation.isi??? 1
social impact