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We characterize the price-transparency role of benchmarks in over-the-counter markets. A benchmark can, under conditions, raise social surplus by increasing the volume of beneficial trade, facilitating more efficient matching between dealers and customers, and reducing search costs. Although the market transparency promoted by benchmarks reduces dealers' profit margins, dealers may nonetheless introduce a benchmark to encourage greater market participation by investors. Low-cost dealers may also introduce a benchmark to increase their market share relative to high-cost dealers. We construct a revelation mechanism that maximizes welfare subject to search frictions, and show conditions under which it coincides with announcing the benchmark.

I study a mechanism design problem in which a designer allocates a single good to one of several agents, and the mechanism is followed by an aftermarket—a post‐mechanism game played between the agent who acquired the good and third‐party market participants. The designer has preferences over final outcomes, but she cannot design the aftermarket. However, she can influence its information structure by publicly disclosing information elicited from the agents by the mechanism. I introduce a class of allocation and disclosure rules, called cutoff rules, that disclose information about the buyer's type only by revealing information about the realization of a random threshold (cutoff) that she had to outbid to win the object. When there is a single agent in the mechanism, I show that the optimal cutoff mechanism offers full privacy to the agent. In contrast, when there are multiple agents, the optimal cutoff mechanism may disclose information about the winner's type; I provide sufficient conditions for optimality of simple designs. I also characterize aftermarkets for which restricting attention to cutoff mechanisms is without loss of generality in a subclass of all feasible mechanisms satisfying additional conditions.

Policymakers frequently use price regulations as a response to inequality in the markets they control. In this paper, we examine the optimal structure of such policies from the perspective of mechanism design. We study a buyer‐seller market in which agents have private information about both their valuations for an indivisible object and their marginal utilities for money. The planner seeks a mechanism that maximizes agents' total utilities, subject to incentive and market‐clearing constraints. We uncover the constrained Pareto frontier by identifying the optimal trade‐off between allocative efficiency and redistribution. We find that competitive‐equilibrium allocation is not always optimal. Instead, when there is inequality across sides of the market, the optimal design uses a tax‐like mechanism, introducing a wedge between the buyer and seller prices, and redistributing the resulting surplus to the poorer side of the market via lump‐sum payments. When there is significant same‐side inequality that can be uncovered by market behavior, it may be optimal to impose price controls even though doing so induces rationing.