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Is there any reading I can do of what information asymmetry can do to free markets?

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  • $\begingroup$ Can you please clarify what exactly you mean by 'does'? You can read loads about information asymmetry on this se, we even have a tag for it, there is some literature recommendation in the comments under this question, there is a self contained answer to this question, etc. $\endgroup$
    – Giskard
    Commented Nov 3, 2023 at 4:51
  • $\begingroup$ Sorry I'm not an economist but in this sense: philosophy.stackexchange.com/questions/104402/… $\endgroup$ Commented Nov 3, 2023 at 4:52
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    $\begingroup$ Well, imo that question is unclear (where does currency come in?), but I don't have voting priviliges on Philosophy. Seems like looking up the term 'rival good' might be beneficial for you. Also, in economics it is accepted that free markets do not generally result in efficient allocation of public goods (which are non-rival goods). $\endgroup$
    – Giskard
    Commented Nov 3, 2023 at 4:55
  • $\begingroup$ The question in the title is simply too broad, there are different situations, however the literature reference request in body would be fine but then I would advise to change title to reflect that you are looking for references to learn about information asymmetry $\endgroup$
    – 1muflon1
    Commented Nov 3, 2023 at 8:27
  • $\begingroup$ Hi @MoreAnonymous. There is some circularity in the question if you ask me. If a market is characterised by information asymmetry (IA), it fails neoclassical requirements of being "free." However, that may be purely semantic. So, to get to your real point on what IA does to a market, it basically stops the price mechanism operating as it should. Therefore, in markets characterised by IA, you can get shortages, poor equilibrium outcomes etc, that wouldn't otherwise be present. This talk is worth a listen: youtube.com/watch?v=YfRdKQX5nLA&t=1975s $\endgroup$
    – EB3112
    Commented Nov 3, 2023 at 11:52

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The Economics of Asymmetric Information by Brian Hiller provides overview of main economic problems in relation to asymmetric information.

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