Market Power And Information Revelation In Dynamic Trading
AbstractWe study a strategic model of dynamic trading where agents are asymmetrically informed over common value sources of uncertainty. There is a continuum of buyers and a finite number n of sellers. All buyers are uninformed, while at least one seller is privately informed about the true state of the world. When n = 1, full information revelation never occurs in equilibrium and the only information transmission happens in the first period. With n > 1 the outcome depends both on the structure of the sellers' information and, even more importantly, on the intensity of competition allowed by the existing trading rules. When there is intense competition (absence of clienteles), information is fully and immediately revealed to the buyers in every equilibrium for n large enough, regardless of the number of informed sellers. On the other hand, for trading arrangements characterized by less intense forms of competition (presence of clienteles), for any n we always have equilibria where information is never fully revealed. Moreover, in that case, when only one seller is informed, for many parameter configurations there are no equilibria with full information revelation, even for large n. (JEL: C72, C78, D82, D83) Copyright (c) 2005 by the European Economic Association.
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Bibliographic InfoArticle provided by MIT Press in its journal Journal of the European Economic Association.
Volume (Year): 3 (2005)
Issue (Month): 6 (December)
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Other versions of this item:
- Piero Gottardi & Roberto Serrano, 2004. "Market Power and Information Revelation in Dynamic Trading," CESifo Working Paper Series 1300, CESifo Group Munich.
- Piero Gottardi & Roberto Serrano, 2002. "Market Power and Information Revelation in Dynamic Trading," Game Theory and Information 0203005, EconWPA.
- Piero Gottardi & Roberto Serrano, 2002. "Market Power and Information Revelation in Dynamic Trading," Economics Working Papers 0027, Institute for Advanced Study, School of Social Science.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
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