Costs and Benefits of Dynamic Trading in a Lemons Market

38 Pages Posted: 5 Sep 2013

See all articles by William Fuchs

William Fuchs

University of Texas at Austin - Department of Finance; Charles III University of Madrid - Department of Economics

Andrzej Skrzypacz

Stanford University - Stanford Graduate School of Business

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

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

Charles III University of Madrid - Department of Economics ( email )

Calle Madrid 126
Getafe, 28903
Spain

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)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
196
Abstract Views
1,209
Rank
288,334
PlumX Metrics