Market Design with Correlated Valuations

Yongmin Chen and Ruqu Wang

No 273504, Queen's Economics Department Working Papers from Queen's University - Department of Economics

Abstract: The effects of information on market design are explored in a simple setting where firms have private information about their correlated fixed costs and the government aims to maximize its expected revenue conditional on achieving efficient allocations. Government revenues are higher when the costs are less correlated (or are more of a private value). The reduced correlation increases the firms’ information rents, but a change in the information structure also changes the expected market structures with positive effects on government revenues. If the government faces the no-deficit constraint, there are situations where efficient allocations are achieved under asymmetric information but not under symmetric information.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 26
Date: 2005-09
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Related works:
Journal Article: Market Design with Correlated Valuations (2006)
Working Paper: Market Design With Correlated Valuations (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:quedwp:273504

DOI: 10.22004/ag.econ.273504

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