Mailath, George and Nöldeke, Georg. (2008) Does competitive pricing cause market breakdown under extreme adverse selection? Journal of economic theory, Vol. 140, H. 1. pp. 97-125.
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Official URL: http://edoc.unibas.ch/dok/A5249303
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Abstract
We study market breakdown in a finance context under extreme adverse selection with and without competitive pricing. Adverse selection is extreme if for any price there are informed agent types with whom uninformed agents prefer not to trade. Market breakdown occurs when no trade is the only equilibrium outcome. We present a necessary and sufficient condition for market breakdown. If the condition holds, then trade is not viable. If the condition fails, then trade can occur under competitive pricing. There are environments in which the condition holds and others in which it fails.
| Faculties and Departments: | 06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Mikroökonomische Theorie (Nöldeke) |
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| UniBasel Contributors: | Nöldeke, Georg |
| Item Type: | Article, refereed |
| Article Subtype: | Research Article |
| Publisher: | Academic Press |
| ISSN: | 1095-7235 |
| Note: | Publication type according to Uni Basel Research Database: Journal article |
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| Identification Number: | |
| Last Modified: | 22 Mar 2012 14:28 |
| Deposited On: | 22 Mar 2012 14:03 |
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