EconPapers    
Economics at your fingertips  
 

The Market for Lemons with Seller Partition

Hans Gersbach (), Akaki Mamageishvili and Oriol Tejada

No 14063, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We introduce a four-stage, multi-prize buying mechanism, which can be used by a (big) buyer to separate low-quality sellers, called "lemon" owners, from high-quality sellers. When the pool of sellers can be partitioned into groups with known mixes of high- and low-quality sellers, the buyer obtains the commodities from the high-quality sellers at a price that matches the willingness to sell. By contrast, "lemon" owners are trapped into selling their items at a low, or even negligible, price. These properties hold even if the buyer cannot commit to a single execution of the mechanism. We outline some applications of our results and suggest that our mechanism might be useful for market makers.

Keywords: Lemons; market; -; Partition; -; Signaling; -; Commitment; -; Decoy; ballots (search for similar items in EconPapers)
JEL-codes: C72 D4 D82 D86 (search for similar items in EconPapers)
Date: 2019-10
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=14063 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

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:cpr:ceprdp:14063

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=14063

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2020-06-29
Handle: RePEc:cpr:ceprdp:14063