"The efficiency of decentralized and centralized markets for lemons"

• Autores: Diego Moreno, John Wooders
• Localización: Documentos de trabajo. Economic series ( Universidad Carlos III. Departamento de Economía ), Nº. 40, 2001
• Idioma: inglés
• Enlaces
  • Texto completo (pdf)
• Resumen

  • In markets with adverse selection, when average quality is low and frictions are small decentralized trade produces a greater surplus than predicted by the competitive model: under decentralized trade some high-quality units of the good trade whereas, due to the ¿lemons problem,¿ only low-quality units trade in the competitive equilibrium. This suggests a reason why these markets are often decentralized. Remarkably, under some conditions payoffs are competitive as frictions vanish, even though all qualities trade.