Entry-proofness and discriminatory pricing under adverse selection

Andrea Attar, Thomas Mariotti and François Salanié
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Thomas Mariotti: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper studies competitive allocations under adverse selection. We rst provide a general necessary and sucient condition for entry on an inactive market to be unprotable. We then use this result to characterize, for an active market, a unique budget-balanced allocation implemented by a market tari making additional trades with an entrant unprotable. Motivated by the recursive structure of this allocation, we nally show that it emerges as the essentially unique equilibrium outcome of a discriminatory ascending auction. These results yield sharp predictions for competitive nonexclusive markets..

Keywords: Adverse Selection; Entry-Proofness; Discriminatory Pricing; Nonexclusive; Markets; Ascending Auctions. (search for similar items in EconPapers)
Date: 2021-03
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Citations: View citations in EconPapers (5)

Published in American Economic Review, 2021, 111 (8), pp.2623-2659. ⟨10.1257/aer.20190189⟩

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Related works:
Journal Article: Entry-Proofness and Discriminatory Pricing under Adverse Selection (2021)
Working Paper: Entry-proofness and discriminatory pricing under adverse selection (2021)
Working Paper: Entry-Proofness and Discriminatory Pricing under Adverse Selection (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03353054

DOI: 10.1257/aer.20190189

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