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Value of information in competitive economies with incomplete markets

Gottardi, Piero and Rahi, Rohit (2014) 'Value of information in competitive economies with incomplete markets.' International Economic Review, 55. 57 - 81. ISSN 0020-6598

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Abstract

We study the value of public information in competitive economies with incomplete markets. We show that generically the welfare effect of a change in the information available prior to trading can be in any direction: There exist changes in information that make all agents better off and changes for which all agents are worse off. In contrast, for any change in information, a Pareto improvement is feasible, that is, attainable by a planner facing the same informational and asset market constraints as agents. In this sense, the response of competitive markets to changes in information is typically not socially optimal.

Item Type: Article
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Elements
Date Deposited: 18 Sep 2019 12:04
Last Modified: 18 Sep 2019 12:04
URI: http://repository.essex.ac.uk/id/eprint/25374

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