Download This PaperCosts and Benefits of Dynamic Trading in a Lemons Market
38 Pages Posted: 5 Sep 2013
Date Written: September 3, 2013
Abstract
We study a dynamic market with asymmetric information that creates the lemons problem. We compare efficiency of the market under different assumptions about the timing of trade. We identify positive and negative aspects of dynamic trading, describe the optimal market design under regularity conditions and show that continuous-time trading can be always improved upon.
Suggested Citation: Suggested Citation
Fuchs, William Martin and Skrzypacz, Andrzej, Costs and Benefits of Dynamic Trading in a Lemons Market (September 3, 2013). Stanford University Graduate School of Business Research Paper No. 2133;
Stanford University Graduate School of Business Research Paper No. 13-4, Available at SSRN: https://ssrn.com/abstract=2320179 or http://dx.doi.org/10.2139/ssrn.2320179
William Martin Fuchs
University of Texas at Austin - Department of Finance ( email )
Red McCombs School of Business
Austin, TX 78712
United States
Andrzej Skrzypacz (Contact Author)
Stanford University - Stanford Graduate School of Business ( email )
655 Knight Way
Stanford, CA 94305-5015
United States
650-736-0987 (Phone)
650-725-9932 (Fax)
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