Publication Date: February 2015
We analyze price transparency in a dynamic market with private information and correlated values. Uninformed buyers compete inter- and intra-temporarily for a good sold by an informed seller suﬀering a liquidity shock. We contrast public versus private price oﬀers. In a two-period case all equilibria with private oﬀers have more trade than any equilibrium with public oﬀers; under some additional conditions we show Pareto-dominance of the private-oﬀers equilibria. If a failure to trade by the deadline results in an eﬀiciency loss, public oﬀers can induce a market breakdown before the deadline, while trade never stops with private oﬀers.
Adverse selection, Transparency, Distress, Market design, Volume
JEL Classification Codes: D82, G14, G18