Intermediation and Competing Auctions
Publikation: Working paper › Forskning
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Intermediation and Competing Auctions. / Kennes, John; Schiff, Aaron.
Cph. : Department of Economics, University of Copenhagen, 2006.Publikation: Working paper › Forskning
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TY - UNPB
T1 - Intermediation and Competing Auctions
AU - Kennes, John
AU - Schiff, Aaron
PY - 2006
Y1 - 2006
N2 - We examine the effects of provision of information about seller qualities by a third-party in a directed search model with heterogeneous sellers, asymmetric information, and where prices are determined ex post. The third party separates sellers into quality-differentiated groups and provides this information to some or all buyers. We show that this always raises total welfare, even if it causes the informed buyers not to trade with low quality sellers. However, buyers and some sellers may be made worse off in equilibrium. We also examine the provision of information by a profit maximizing monopoly, and show that it may have an incentive to overinvest in the creation of information relative to the social optimum.
AB - We examine the effects of provision of information about seller qualities by a third-party in a directed search model with heterogeneous sellers, asymmetric information, and where prices are determined ex post. The third party separates sellers into quality-differentiated groups and provides this information to some or all buyers. We show that this always raises total welfare, even if it causes the informed buyers not to trade with low quality sellers. However, buyers and some sellers may be made worse off in equilibrium. We also examine the provision of information by a profit maximizing monopoly, and show that it may have an incentive to overinvest in the creation of information relative to the social optimum.
M3 - Working paper
BT - Intermediation and Competing Auctions
PB - Department of Economics, University of Copenhagen
CY - Cph.
ER -
ID: 312434