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Disclosure services and welfare gains in matching markets for indivisible assets

Author

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  • Kei Kawakami

    (Aoyama Gakuin University)

Abstract

We present a competitive matching model in which indivisible assets are reallocated among many traders. The model has three features: (i) traders are heterogeneous in their prospects as buyers, sellers, and also in their stand-alone values with endowed assets, (ii) buyers do not know true values of assets sold, (iii) sellers can disclose values of their assets by paying fees. Despite its complexity, the model admits closed-form solutions. Two main results emerge. First, if full Disclosure is facilitated by a monopolist, it captures a large fraction of the welfare gains. Second, adding the option of minimum disclosure, when combined with a cap regulation on price-dependent fees for full disclosure, significantly weakens the monopolist’s power.

Suggested Citation

  • Kei Kawakami, 2024. "Disclosure services and welfare gains in matching markets for indivisible assets," Review of Economic Design, Springer;Society for Economic Design, vol. 28(3), pages 485-532, September.
    • Handle: RePEc:spr:reecde:v:28:y:2024:i:3:d:10.1007_s10058-024-00352-2
    DOI: 10.1007/s10058-024-00352-2
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    More about this item

    Keywords

    Asymmetric information; Disclosure; Market segmentation; Matching;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • G3 - Financial Economics - - Corporate Finance and Governance
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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