00000nam 2200000za 4500 9.835936 CaOODSP 20221107150800 cr ||||||||||| 170428s2017 oncd ob f000 0 eng d CaOODSP eng eng fre n-cn--- FB3-5/2017-15E-PDF Davoodalhosseini, S. Mohammad R. Constrained efficiency with adverse selection and directed search [electronic resource] / by S. Mohammad R. Davoodalhosseini. [Ottawa] : Bank of Canada, 2017. ii, 80 p. : col. charts Bank of Canada staff working paper, 1701-9397 ; 2017-15 "April 2017." "This paper was previously circulated under the title “Constrained Efficiency with Searchand Information Frictions”"--Acknowledgements, p. i. Includes bibliographical references. “Constrained efficient allocation (CE) is characterized in a model of adverse selection anddirected search (Guerrieri, Shimer, and Wright (2010)). CE is defined to be the allocation that maximizes welfare, the ex-ante utility of all agents, subject to the frictions of the environment. When equilibrium does not achieve the first best (the allocation that maximizes welfare under complete information), then welfare in the CE is strictly higher than welfare in the equilibrium allocation. That is, equilibrium is not constrained efficient. Under some conditions, welfare in the CE even attains welfare in the first best. Finally, sufficient conditions are provided under which equilibrium is not constrained Pareto efficient, either. Cross-subsidization is the key to all these results. In an asset market application, the first best is shown to be implementable through tax schedules that are monotone in the asset prices"--Abstract, p. ii. Includes abstract in French. gccst Capital markets gccst Financial institutions gccst Regulation gccst Policy Bank of Canada. Staff working paper (Bank of Canada) 1701-9397 ; 2017-15 (CaOODSP)9.806221 PDF 1.41 MB https://publications.gc.ca/collections/collection_2017/banque-bank-canada/FB3-5-2017-15-eng.pdf