Imperfect Competition and Efficiency in Lemons Markets

Abhinay Muthoo and Suresh Mutuswami

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: This paper studies the impact of competition on the degree of inefficiency in lemons markets. More precisely, we characterize the second-best mechanism (i.e., the optimal mechanism with private information) in a stylized lemons market with finite numbers of buyers and sellers. We then study the relationship between the degree of efficiency of the second-best mechanism and market competitiveness. The relationship between the first-best and second-best mechanisms is also explored. JEL Classification: C7 ; D4 ; D61 ; D82

Date: 2010
New Economics Papers: this item is included in nep-com, nep-cta, nep-gth and nep-ind
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https://warwick.ac.uk/fac/soc/economics/research/w ... s/2010/twerp_939.pdf

Related works:
Journal Article: Imperfect Competition and Efficiency in Lemons Markets (2011)
Working Paper: Imperfect Competition and Efficiency in Lemons Markets (2010)
Working Paper: Imperfect Competition and Efficiency in Lemons Markets (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:939

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