Market Power and Information Revelation in Dynamic Trading

Piero Gottardi and Roberto Serrano

Game Theory and Information from University Library of Munich, Germany

Abstract: We study a strategic model of dynamic trading where agents are asymmetrically informed over common value sources of uncertainty. There is a continuum of uninformed buyers and a finite number of sellers, some of them informed. When there is only one seller, full information revelation never occurs in equilibrium and the only information transmission happens in the first period. The outcome with n sellers depends both on the structure of sellers' information and the intensity of competition among them allowed by the market rules. We show that the latter plays an even more important role. With intense competition (absence of clienteles), information is fully and immediately revealed to the buyers in every equilibrium for n large enough, both when all sellers are informed and when only one seller is informed. On the other hand, with a less intense form of competition (presence of clienteles), collusive equilibria, where information is never revealed, also exist, whatever the number of sellers. Moreover, when only one seller is informed, for many parameter configurations there are no equilibria with full information revelation, for any n.

Keywords: subliminal; extant; Smith; economagic; gmm (search for similar items in EconPapers)
JEL-codes: C72 C78 D82 D83 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2002-03-14
New Economics Papers: this item is included in nep-gth and nep-mic
Note: Type of Document - pdf; prepared on IBM PC; to print on HP/PostScript; pages: 40
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Market Power And Information Revelation In Dynamic Trading (2005)
Working Paper: Market Power and Information Revelation in Dynamic Trading (2004)
Working Paper: Market Power and Information Revelation in Dynamic Trading (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpga:0203005

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