RT Monograph
SR 00
A1 Attar, Andrea
A1 Mariotti, Thomas
A1 Salanié, François
T1 Non-Exclusive Competition in the Market for Lemons
YR 2009
FD 2009-06
VO 09-055
AB We consider an exchange economy in which a seller can trade an endowment of a divisible good whose quality she privately knows. Buyers compete in menus of non-exclusive contracts, so that the seller may choose to trade with several buyers. In this context, we show that an equilibrium always exists and that aggregate equilibrium allocations are generically unique. Although the good offered by the seller is divisible, aggregate equilibrium allocations exhibit no fractional trades. In equilibrium, goods of relatively low quality are traded at the same price, while goods of higher quality may end up not being traded at all if the adverse selection problem is severe. This provides a novel strategic foundation for Akerlof's (1970) results, which contrasts with standard competitive screening models postulating enforceability of exclusive contracts. Latent contracts that are issued but not traded in equilibrium turn out to be an essential feature of our construction.
T2 TSE Working Paper
PB TSE Working Paper
AV Published
LK https://publications.ut-capitole.fr/id/eprint/3246/
UL http://tse-fr.eu/pub/21926