• Eric Maskin


Can Withholding or Damage Improve Welfare in Bilateral Trade Mechanisms? Eric Maskin, 2020, Paper, "We study the welfare consequences of allowing the mechanism designer to withhold or damage resources in the optimal mechanism for bilateral trade with independent private values. We show that withholding monetary transfers or withholding the good from both traders is never optimal. Similarly, damaging the good for the buyer cannot improve welfare. By contrast, damaging the good for the seller may improve welfare in the optimal mechanism. However, such welfare improvements are feasible only if the damage hurts seller types with lower initial valuations more severely." Link