Screening and Adverse Selection in Frictional Markets

• 成果类型: Article
• 署名作者: Lester, Benjamin; Shourideh, Ali; Venkateswaran, Venky; Zetlin-Jones, Ariel
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Philadelphia; Carnegie Mellon University; New York University
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/700730
• 发表日期: 2019
• 页码: 338-377
• 关键词: Asymmetric information; imperfect competition; common agency; equilibrium; insurance; revelation; sales; MODEL

摘要

We incorporate a search-theoretic model of imperfect competition into a standard model of asymmetric information with unrestricted contracts. We characterize the unique equilibrium and use our characterization to explore the interaction between adverse selection, screening, and imperfect competition. We show that the relationship between an agent's type, the quantity he trades, and the price he pays is jointly determined by the severity of adverse selection and the concentration of market power. Therefore, quantifying the effects of adverse selection requires controlling for market structure. We also show that increasing competition and reducing informational asymmetries can decrease welfare.