Economics at your fingertips  

Competitive Search and the Social Value of Public Information

Piotr Denderski
Authors registered in the RePEc Author Service: Eeva Mauring

No 16884, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In the presence of trading frictions and imperfect information about market conditions, the quality of the available information matters for optimal prices. Prices, in turn, matter for the the likelihood of trading. We model this interdependency in a competitive search equilibrium with aggregate risk and study the social value of better public information. While perfect information is always optimal, marginal effects of information can be positive, negative or neutral for trade. Equilibria featuring inefficient price dispersion, or the absence of trades in some states of the world, can arise if either some or all sellers choose a price that implies not selling the good when the demand is low. The salient features of the matching function and aggregate risk matter for how information affects the equilibrium. We also find that entry is in general inefficient. Lastly, we provide conditions under which a more general trading mechanism improves upon posting a single price.

Keywords: Competitive search; Public information; Aggregate risk; Uncertainty shocks; transparency; Price dispersion (search for similar items in EconPapers)
JEL-codes: C78 D83 (search for similar items in EconPapers)
Date: 2022-05
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (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

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:

Ordering information: This working paper can be ordered from

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 2023-05-07
Handle: RePEc:cpr:ceprdp:16884