Market Design with Correlated Valuations
AbstractThe effects of information on market design are explored in a simple setting where firms have private information about their correlated fixed costs and the government aims to maximize its expected revenue conditional on achieving efficient allocations. Government revenues are higher when the costs are less correlated (or are more of a private value). The reduced correlation increases the firms' information rents, but a change in the information structure also changes the expected market structures with positive effects on government revenues. If the government faces the no-deficit constraint, there are situations where efficient allocations are achieved under asymmetric information but not under symmetric information.
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Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 1034.
Length: 34 pages
Date of creation: Sep 2005
Date of revision:
Publication status: Forthcoming in Economica
market structure; correlated values; market design; government revenue;
Other versions of this item:
- D4 - Microeconomics - - Market Structure and Pricing
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- H8 - Public Economics - - Miscellaneous Issues
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-03-05 (All new papers)
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