Search, liquidity, and retention: Screening multidimensional private information

Basil Williams

    Research output: Contribution to journalArticlepeer-review

    Abstract

    A large literature has shown that asset quality may be signaled by retention or, in a separate literature, screened by liquidity. I present a general framework to analyze both instruments, offering conditions that characterize which instrument will be used in equilibrium. I then expand the private information to include not only asset quality but also seller patience, showing that both retention and liquidity may be used to fully separate both dimensions of private information. The expanded model offers new predictions about how price, quantity, and liquidity covary with each other and with seller private information.

    Original languageEnglish (US)
    Pages (from-to)1487-1507
    Number of pages21
    JournalJournal of Political Economy
    Volume129
    Issue number5
    DOIs
    StatePublished - May 2021

    ASJC Scopus subject areas

    • Economics and Econometrics

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