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Abstract: We study bilateral trade when private information arrives sequentially: the buyer learns her signal before the seller. In private values, this timing asymmetry restores efficiency: the efficient trade rule is implementable by a direct mechanism that is incentive compatible, exact budget balanced, and individually rational (interim for the buyer and ex ante for the seller). With interdependent values, efficiency can fail. We give primitive feasibility conditions and show that they hinge on how the seller’s cost responds to the buyer’s signal in the trading region. Allowing disclosure of the buyer’s report does not expand implementability.
Keywords: Bilateral Trade, Mixed Participation, Efficiency, Disclosure
JEL Classification: D82; D61