Uncertain delivery in markets for lemons

Joao Correia-da-Silva

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: 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.

Keywords: General equilibrium; Asymmetric information; Adverse selection; Uncertain delivery; Pool; Delivery rates (search for similar items in EconPapers)
JEL-codes: C62 C72 D51 D82 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2009-01
New Economics Papers: this item is included in nep-cta
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Working Paper: Uncertain delivery in markets for lemons (2009)
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