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Imperfect Competition and Efficiency in Lemons Markets

Muthoo, Abhinay and Mutuswami, Suresh (2007) Imperfect Competition and Efficiency in Lemons Markets. Working Paper. University of Essex, Department of Economics, Economics Discussion Papers, Colchester.


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This paper studies the impact of competition on the degree of inefficiency in lemons markets. More precisely, we characterize the second-best mechanism (i.e., the optimal mechanism with private information) in a stylized lemons market with finite numbers of buyers and sellers. We then study the relationship between the degree of efficiency of the second-best mechanism and market competitiveness. The relationship between the first-best and second-best mechanisms is also explored.

Item Type: Monograph (Working Paper)
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Users 161 not found.
Date Deposited: 28 Aug 2014 11:40
Last Modified: 28 Aug 2014 11:40

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