期刊名称：Discussion Papers in Economics / Department of Economics, Royal Holloway
出版年度：2009
卷号：2009
出版社：University of London
摘要：Since Akerlof's (1970) seminal paper the existence of adverse selection due to asymmetric
information about quality is well-understood. Yet two questions remain. First, given the
negative implications for trading and welfare, how do such markets come into existence? And
second, why have many studies failed to ¯nd direct or indirect evidence of adverse selection?
In addressing the ¯rst question directly we shed some light on the second.
We consider a market in which ¯rms make an observable investment that generates products
of a quality that becomes known only to the ¯rm. Entry has the tendency to lower prices, which
may lead to adverse selection. The implied price collapse limits the amount of entry so that
high prices are supported in the market equilibrium, which results in above normal pro¯ts.
While contributing to our understanding of markets with asymmetric information and ad-
verse selection, the model also provides insight into the question of why markets with adverse
selection are empirically hard to identify. The analysis suggests that rather than observing the
canonical market collapse, such markets are instead characterized by less entry than would be
empirically predicted and above normal pro¯ts even in markets with low measures of concen-
tration.
