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Thomas Mariotti (Toulouse School of Economics)

8 November 2011 @ 14:30

 

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Details

Date:
8 November 2011
Time:
14:30
Event Category:

“Non-Exclusive Competitionunder Adverse Selection”

Abstract

A seller of a divisible good faces several identical buyers. The quality of the good may be low or high, and is the seller’s private information. The seller has strictly convex preferences that satisfy a single-crossing condition. Buyers compete by posting menus of non-exclusive contracts, so that the seller can simultaneously and privately trade with several buyers. We provide a necessary and sufficient condition for the existence of a pure-strategy equilibrium. Aggregate equilibrium allocations are unique. Any traded contract must yield zero profit. If a quality is indeed traded, then it is traded efficiently. Depending on parameters, both qualities may be traded, or only one of them, or the market may break down to a no-trade equilibrium.