Moreno, DiegoWooders, John2006-11-092006-11-092001-012340-5031https://hdl.handle.net/10016/251In markets with adverse selection, when average quality is low and frictions are small decentralized trade produces a greater surplus than predicted by the competitive model: under decentralized trade some high-quality units of the good trade whereas, due to the "lemons problem", only low-quality units trade in the competitive equilibrium. This suggests a reason why these markets are often decentralized. Remarkably, under some conditions payoffs are competitive as frictions vanish, even though all qualities trade.447766 bytesapplication/pdfengAtribución-NoComercial-SinDerivadas 3.0 Españaworking paperEconomíaopen accesswe014005