Thomas Mariotti (Toulouse School of Economics)
8 November 2011 @ 14:30
- Past event
“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.