Market power and information revelation in dynamic trading

Arbeitspapier

We study a strategic model of dynamic trading where agents are asymmetrically informed over common value sources of uncertainty. There is a continuum of buyers and a finite number n of sellers. All buyers are uninformed, while at least one seller is privately informed about the true state of the world. When n = 1, full information revelation never occurs in equilibrium and the only information transmission happens in the first period. With n > 1 the outcome depends both on the structure of the sellers? information and, even more importantly, on the intensity of competition allowed by the trading rules. When there is intense competition (absence of clienteles), information is fully and immediately revealed to the buyers in every equilibrium for n large enough, regardless of the number of informed sellers. On the other hand, for trading arrangements characterized by less intense forms of competition (presence of clienteles), for any n we always have equilibria where information is never fully revealed. Moreover, in that case, when only one seller is informed, for many parameter configurations there are no equilibria with full information revelation, even for large n.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 1300

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Bargaining Theory; Matching Theory ; Noncooperative Games ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
• Subject: asymmetric information ; information revelation ; dynamic trading ; oligopolistic competition ; clienteles ; Marktmechanismus ; Informationsverhalten ; Wettbewerb ; Oligopol ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gottardi, Piero ; Serrano, Roberto
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/18938
• Last update: 10.03.2025, 11:43 AM CET