This article extends the standard competitive adverse selection model by allowing for qualitatively different information structures of agents on the informed side of the market. Using the stylized framework of the market for used cars, we examine the welfare properties of equilibria under the assumption that a fraction of the sellers remains uninformed about a parameter that is relevant for their own transaction. Whether market performance increases o decreases in the number of uninformed sellers is shown to depend on (1) the potential gains from trade in the market and (2) the average quality of the sellers information structure.
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Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.
Volume (Year): 42 (2001) Issue (Month): 1 (February) Pages: 25-41 Download reference. The following formats are available: HTML
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F. Adriani & LG. Deidda, 2006.
"The Monopolist’s Blues,"
Working Paper CRENoS
200611, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
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