Dynamic market for lemons with endogenous quality choice by the seller

• 成果类型: Article
• 署名作者: Kawai, Keiichi
• 署名单位: University of Queensland
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2014.01.011
• 发表日期: 2014
• 页码: 152-162
• 关键词: Adverse selection; bargaining; delay; moral hazard

摘要

We analyze a dynamic market for lemons in which the quality of the good is endogenously determined by the seller. Potential buyers sequentially submit offers to one seller. The seller can make an investment that determines the quality of the item at the of the game, which is unobservable to buyers. At the interim stage of the game, the information and payoff structures are the same as in the market for lemons. Our main result is that the possibility of trade does not create any efficiency gain if (i) the common discounting is low, and (ii) the static incentive constraints preclude the mutually agreeable ex-ante contract under which the trade happens with probability one. Our result does depend on whether the offers by buyers are private or public. (C) 2014 Elsevier Inc. All rights reserved.