(De)centralizing Trade

Christian Opp and Vincent Glode

No 1591, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: We propose a parsimonious model to evaluate the relative merits of centralized and decentralized trade when agents are asymmetrically informed about the value of an asset. In a centralized market, the seller posts one price and buyers simultaneously decide whether to pay this price for the asset. In a decentralized market, the seller sequentially contacts buyers and quotes them potentially different prices. We compare the social efficiency of trade in these two types of market when traders’ information sets are independent of the market structure as well as when the acquisition of information by traders is endogenous.

Date: 2016
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