We study a continuous‐time version of the intermediation model Grossman and Miller. To wit, we solve for competitive equilibrium prices at which liquidity takers' demands are absorbed by dealers with quadratic inventory costs, who can in turn gradually transfer these positions to an exogenous open market finite liquidity. This endogenously leads transient price impact dealer market. Smooth, dif...

This paper characterizes the optimal information structure in competitive insurance markets with adverse selection. We consider a regulator that assigns ratings to individuals according their expected costs. Insurers observe these and compete as Akerlof (1970). The rating system minimizes ex-ante risk subject participation constraints. prove any such market there exists unique under which all t...