(De)centralizing Trade

Vincent Glode and Christian Opp 

April 1, 2016

We propose a parsimonious model to evaluate the relative merits of decentralized and centralized trade when agents are asymmetrically informed about the value of an asset. In a decentralized market, the seller sequentially contacts buyers and quotes them potentially different prices. In a centralized market, the seller
posts a price and buyers simultaneously decide whether to pay this price for the asset. We compare the social efficiency of trade in these two types of market when traders’ information sets are independent of the market structure as well as when the acquisition of information by traders is endogenous. (JEL D82, G23,
L10)