Costs and Benefits of Dynamic Trading in a Lemons Market
AbstractWe study a dynamic market with asymmetric information that creates the lemons problem. We compare efficiency of the market under different assumptions about the timing of trade. We identify positive and negative aspects of dynamic trading, describe the optimal market design under regularity conditions and show that continuous-time trading can be always improved upon.
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Bibliographic InfoPaper provided by Stanford University, Graduate School of Business in its series Research Papers with number 2133.
Date of creation: Aug 2013
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-10-18 (All new papers)
- NEP-CTA-2013-10-18 (Contract Theory & Applications)
- NEP-IND-2013-10-18 (Industrial Organization)
- NEP-MIC-2013-10-18 (Microeconomics)
- NEP-REG-2013-10-18 (Regulation)
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