Investing to access an adverse selection market

Sander Heinsalu

International Journal of Industrial Organization, 2020, vol. 72, issue C

Abstract: I analyse a market with asymmetric information and interdependent values. Accessing the market is costly and stochastic, e.g. requires lobbying, licences or R&D. For a range of parameter values, interventions that raise production or entry costs for all seller types increase trade, investment and payoff for all types. This effect is driven by a novel feedback loop between the market composition and the investment in access.

Keywords: Lemons market; Common values; Costly entry; Market composition; Asymmetric information (search for similar items in EconPapers)
JEL-codes: C72 D82 D83 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167718720300837
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:72:y:2020:i:c:s0167718720300837

DOI: 10.1016/j.ijindorg.2020.102660

Access Statistics for this article

International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal

More articles in International Journal of Industrial Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().