Market Power and Information Revelation in Dynamic Trading

Piero Gottardi and Roberto Serrano

No 27, Economics Working Papers from Institute for Advanced Study, School of Social Science

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, more importantly, on the intensity of competition among them allowed by the trading rules. 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), we always have equilibria where information is never fully revealed, whatever the number of sellers. Moreover in this case, when only one seller is informed, for many parameter configurations there are no equilibria with full information revelation, for any n.

Keywords: asymmetric information; information revelation; dynamic trading; oligopolistic competition; clienteles (search for similar items in EconPapers)
JEL-codes: C72 C78 D82 D83 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2002-11
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Published in the European Economic Association, December 2005, Vol 3(6) 1279-1317

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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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