Entry-Proofness and Discriminatory Pricing under Adverse Selection

Andrea Attar, Thomas Mariotti and François Salanié

American Economic Review, 2021, vol. 111, issue 8, 2623-59

Abstract: This paper studies competitive allocations under adverse selection. We first provide a general necessary and sufficient condition for entry on an inactive market to be unprofitable. We then use this result to characterize, for an active market, a unique budget-balanced allocation implemented by a market tariff making additional trades with an entrant unprofitable. Motivated by the recursive structure of this allocation, we finally show that it emerges as the essentially unique equilibrium outcome of a discriminatory ascending auction. These results yield sharp predictions for competitive nonexclusive markets.

JEL-codes: D11 D43 D82 D86 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Entry-proofness and discriminatory pricing under adverse selection (2021)
Working Paper: Entry-proofness and discriminatory pricing under adverse selection (2021)
Working Paper: Entry-Proofness and Discriminatory Pricing under Adverse Selection (2021)
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DOI: 10.1257/aer.20190189

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