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Liquid Bundles

Author

Listed:
  • Emmanuel Farhi
  • Jean Tirole
Abstract
Parties in financial markets, industries, compensation design or politics may negotiate on either a piecemeal or a bundled basis. Little is known about the desirability of bundling when values are common and/or information endogenous. The paper shows that bundling encourages information-equalizing investments, thereby facilitating trade. It accordingly revisits and qualifies existing knowledge on security design.

Suggested Citation

  • Emmanuel Farhi & Jean Tirole, "undated". "Liquid Bundles," Working Paper 70971, Harvard University OpenScholar.
    • Handle: RePEc:qsh:wpaper:70971
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    File URL: http://scholar.harvard.edu/farhi/node/70971
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    References listed on IDEAS

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    Cited by:

    1. Tao Peng, 2017. "Money And Product Quality Under Asymmetric Information," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1388-1399, July.
    2. Wagner, Wolf & Uras, Burak, 2017. "Efficient Lemons," CEPR Discussion Papers 11803, C.E.P.R. Discussion Papers.
    3. Pavan, Alessandro & Vives, Xavier, 2015. "Information, Coordination, and Market Frictions: An Introduction," Journal of Economic Theory, Elsevier, vol. 158(PB), pages 407-426.

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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