Too much trade: The hidden problem of adverse selection

• 成果类型: Article
• 署名作者: de Meza, David; Reito, Francesco; Reyniers, Diane
• 署名单位: University of London; London School Economics & Political Science; University of Catania
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2021.104551
• 发表日期: 2021
• 关键词: JEL classification; C13; D14; D82

摘要

Adverse selection famously leads to the crowding out of socially beneficial trades. We show that even more trades may be simultaneously crowded in. The reason is that, in the absence of complete unravelling, lemons fetch more under adverse selection. It is demonstrated how these bad trades occur in insurance, credit and used-car markets, and some policy implications are discussed. (c) 2021 Elsevier B.V. All rights reserved.