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Essays on intermediation in trade problems

Çeliktemur, Mustafa Can (2014) Essays on intermediation in trade problems. PhD thesis, The London School of Economics and Political Science (LSE).

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Abstract

This thesis studies the theory of intermediation in trade problems arising from the allocation of a single indivisible object. Chapter I considers a general trade problem with a single seller and multiple buyers. I analyze a game, where multiple intermediaries compete with each other by designing contracts that determine the terms of trade between the bargaining parties. I show the existence and uniqueness of equilibrium outcomes. Repeating the analysis for the case of a single monopolist intermediary, I compare the equilibrium outcomes and show that allocative efficiency is strictly improved as a result of the competition among intermediaries. Chapter II considers a bilateral trade problem with two-sided asymmetric information where the buyer’s valuation may depend on the private information of both bargaining parties. I analyze the impact of intermediation by a profit-maximizing intermediary in a game, where the seller has the ability to trade directly with the buyer. I provide a necessary and sufficient condition for the equilibrium outcomes with the presence of an intermediary to be strictly more efficient than those that are attainable in its absence. Lastly, in Chapter III, similar to the previous chapter, bilateral trade problems with informational externalities arising from interdependences are considered. I analyze a game, where the seller designs a contract at ex-ante stage before learning his private information. I characterize the optimal mechanisms and show that they attain second-best outcomes. The Pareto optimality of ex-ante contracting in the absence of an intermediary, in turn presents a natural limit to the benefits to be accrued from intermediation.

Item Type: Thesis (PhD)
Additional Information: © 2014 Mustafa Can Çeliktemur
Library of Congress subject classification: H Social Sciences > HB Economic Theory
Sets: Departments > Economics
Supervisor: Nava, Francesco and Szentes, Balázs
URI: http://etheses.lse.ac.uk/id/eprint/966

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