Camargo, Braz; Lester, Benjamin - In: Journal of Economic Theory 153 (2014) C, pp. 534-568
We study a dynamic, decentralized lemons market with one-time entry and characterize its set of equilibria. Our framework offers a theory of how “frozen” markets suffering from adverse selection recover or “thaw” over time endogenously; given an initial fraction of lemons, our model...