The paper compares the productive efficiency of public and private enterprises in an adverse selection model with managerial effort. Under either ownership structure, the firm's manager has private information on his ability. The principal can invest in monitoring to elicit this ability. As a...

This paper extends the standard competitive adverse selection model by allowing for qualitatively different information structures of agents on the informed side of the market. Using the stylized framework of the market for used cars, we examine the welfare properties of equilibria under the...