Arbeitspapier

The Social Costs of Side Trading

We study resource allocation under private information when the planner cannot prevent bilateral side trading between consumers and firms. Adverse selection and side trading severely restrict feasible trades: each marginal quantity must be fairly priced given the consumer types who purchase it. The resulting social costs are twofold. First, second-best effciency and robustness to side trading are in general irreconcilable requirements. Second, there actually exists only one budget-feasible allocation robust to side trading, which deprives the planner from any capacity to redistribute resources between different types of consumers. We discuss the relevance of our results for insurance and financial markets.

Sprache
Englisch

Erschienen in
Series: EconPol Working Paper ; No. 34

Klassifikation
Wirtschaft

Ereignis
Geistige Schöpfung
(wer)
Attar, Andrea
Mariotti, Thomas
Salanié, François
Ereignis
Veröffentlichung
(wer)
ifo Institute - Leibniz Institute for Economic Research at the University of Munich
(wo)
Munich
(wann)
2019

Handle
Letzte Aktualisierung
10.03.2025, 11:45 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Attar, Andrea
  • Mariotti, Thomas
  • Salanié, François
  • ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Entstanden

  • 2019

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