Nonexclusive competition under adverse selection

, (), , () and , ()
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,: Toulouse School of Economics and Facoltà di Economia, Università degli Studi di Roma "Tor Vergata"
,: Toulouse School of Economics
,: Toulouse School of Economics
Authors registered in the RePEc Author Service: Andrea Attar and François Salanié

Theoretical Economics, 2014, vol. 9, issue 1

Abstract: A seller of a divisible good faces several identical buyers. The quality of the good may be low or high, and is the seller's private information. The seller has strictly convex preferences that satisfy a single-crossing property. Buyers compete by posting menus of nonexclusive contracts, so that the seller can simultaneously and privately trade with several buyers. We provide a necessary and sufficient condition for the existence of a pure-strategy equilibrium. Aggregate equilibrium trades are unique. Any traded contract must yield zero profit. If a quality is actually traded, then it is efficiently traded. Depending on parameters, both qualities may be traded, or only one of them, or the market may break down to a no-trade equilibrium.

Keywords: Adverse selection; competing mechanisms; nonexclusivity (search for similar items in EconPapers)
JEL-codes: D43 D82 D86 (search for similar items in EconPapers)
Date: 2014-02-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (43)

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Related works:
Working Paper: Non-Exclusive Competition under Adverse Selection (2011)
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