Publications [#369878] of Leslie M. Marx

Journal Articles

1. Loertscher, S; Marx, LM, Bilateral Trade with Multiunit Demand and Supply, Management Science, vol. 69 no. 2 (February, 2023), pp. 1146-1165 [doi]
   (last updated on 2025/04/03)

   Abstract:
   We study a bilateral trade problem with multiunit demand and supply and one-dimensional private information. Each agent geometrically discounts additional units by a constant factor. We show that when goods are complements, the incentive problem-measured as the ratio of second-best to first-best social surplus-becomes less severe as the degree of complementarity increases. In contrast, if goods are substitutes and each agent's distribution exhibits linear virtual types, then this ratio is a constant. If the bilateral trade setup arises from prior vertical integration between a buyer and a supplier, with the vertically integrated firm being a buyer facing an independent supplier, then the ratio of second-best to first-best social surplus is, in general, not monotone in the degree of complementarity when products are substitutes and is increasing when products are complements. Extensions to profit maximization by a market maker and a discrete public good problem show that the broad insight that complementarity of goods mitigates the incentive problem generalizes to these settings.