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INFORMATION AND INTERRELATIONS BETWEEN THE DEALER AND PRIVATE MARKETS
Author(s) -
Kim JaeCheol
Publication year - 1988
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.1988.tb00874.x
Subject(s) - private information retrieval , economics , microeconomics , perfect information , pareto principle , imperfect , quality (philosophy) , pareto optimal , perfect competition , imperfect competition , complete information , observable , mathematics , computer science , set (abstract data type) , operations management , statistics , physics , philosophy , quantum mechanics , linguistics , programming language
A competitive equilibrium model of the dealer and private markets is constructed where buyers in the private market obtain some but imperfect information about quality by observing some characteristic of the good while those in the dealer market have perfect information. Under some conditions, there may exist two equilibria. It is shown that one equilibrium is unstable and Pareto inferior to the other. Comparative static analysis are made in the Pareto superior equilibrium to conclude that the size of the dealer market is inversely related to the amount of information about quality contained in the observable characteristic.