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Optimal policy in lemon markets with flexible information acquisition

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  • Baek, Seungjun

Abstract

I examine the impact of government interventions in lemon markets where buyers can acquire information about asset returns. In markets where the cost of information is high, direct asset purchases may cause welfare losses by crowding out private asset demand.

Suggested Citation

  • Baek, Seungjun, 2022. "Optimal policy in lemon markets with flexible information acquisition," Economic Modelling, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:ecmode:v:106:y:2022:i:c:s0264999321002583
    DOI: 10.1016/j.econmod.2021.105669
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    More about this item

    Keywords

    Credit policy; Adverse selection; Information acquisition; Government asset purchases;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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