Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/85495
Authors: 
Janssen, Maarten C.W.
Karamychev, Vladimir
Year of Publication: 
2000
Series/Report no.: 
Tinbergen Institute Discussion Paper 00-109/1
Abstract: 
We investigate the nature of the adverse selection problem in a market for adurable goodwhere trading and entry of new buyers and sellers takes place in continuoustime. In thecontinuous time model equilibria with properties that are qualitativelydifferent from thestatic equilibria, emerge. Typically, in equilibria of the continuous timemodel sellers withhigher quality wait in order to sell and wait more than sellers of lower qualitydo. Among other things, we show that for any distribution of quality there exist an infinite number of cyclical equilibria where all goods are traded within a finite time after entering the market.This holds true even if the good is not perfectly durable or when buyers are not risk-neutral.
Subjects: 
Dynamic Trading
Asymmetric Information
Entry
Durable Goods
JEL: 
D82
Document Type: 
Working Paper

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