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Uncertain delivery in markets for lemons

  • Joao Correia-da-Silva

The notion of uncertain delivery is extended to study exchange economies in which agents have different abilities to distinguish between goods (for example a car in good condition versus a car in bad condition). In this setting, it is useful to distinguish goods not only by their physical characteristics,but also by the agent that is bringing them to the market. Equilibrium is shown to exist, and characterized by the fact that agents always receive the cheapest bundle among those that they cannot distinguish from truthful delivery. Several examples are presented as an illustration.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 814577000000000121.

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Date of creation: 06 Feb 2009
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Handle: RePEc:cla:levarc:814577000000000121
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  1. Ana Paula Ribeiro, 2009. "Interactions between Labor Market Reforms and Monetary Policy under Slowly Changing Habits," FEP Working Papers 309, Universidade do Porto, Faculdade de Economia do Porto.
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  8. Edward C Prescott & Robert M Townsend, 2010. "Pareto Optima and Competitive Equilibria With Adverse Selection and Moral Hazard," Levine's Working Paper Archive 2069, David K. Levine.
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  11. Edward C Prescott & Robert M Townsend, 1997. "General Competitive Analysis in an Economy with Private Information," Levine's Working Paper Archive 1578, David K. Levine.
  12. João Correia-da-Silva & Carlos Hervés-Beloso, 2008. "General equilibrium with private state verification," FEP Working Papers 269, Universidade do Porto, Faculdade de Economia do Porto.
  13. Bisin, Alberto & Gottardi, Piero, 1999. "Competitive Equilibria with Asymmetric Information," Journal of Economic Theory, Elsevier, vol. 87(1), pages 1-48, July.
  14. Douglas Gale, 1996. "Equilibria and Pareto optima of markets with adverse selection (*)," Economic Theory, Springer, vol. 7(2), pages 207-235.
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