Producers' Loss Due to Asymmetric Information: An Application to a Specific Case

Sylvette Monier-Dilhan and Herve Ossard

European Review of Agricultural Economics, 1998, vol. 25, issue 2, 155-69

Abstract: In this paper we estimate the loss of revenue to producers due to asymmetric formation in markets for perishable agricultural products. The theoretical framework is the first-price auction model with the independent private values Paradigm Following Laffont, Ossard and Vuong (1995), we use a structural approach. We compute the loss to producers, that is, the extra profit of the buyer due to asymmetric information. Our results indicate that the buyer's informational rent is about 10 per cent of the observed price. Copyright 1998 by Oxford University Press.

Date: 1998
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