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.
- Language
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Englisch
- Bibliographic citation
-
Series: EconPol Working Paper ; No. 34
- Classification
-
Wirtschaft
- Event
-
Geistige Schöpfung
- (who)
-
Attar, Andrea
Mariotti, Thomas
Salanié, François
- Event
-
Veröffentlichung
- (who)
-
ifo Institute - Leibniz Institute for Economic Research at the University of Munich
- (where)
-
Munich
- (when)
-
2019
- Handle
- Last update
-
10.03.2025, 11:45 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Attar, Andrea
- Mariotti, Thomas
- Salanié, François
- ifo Institute - Leibniz Institute for Economic Research at the University of Munich
Time of origin
- 2019
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