When It's Not the Only Game in Town: The Effect of Bilateral Search on the Quality of a Dealer Market
AbstractThe authors report results from experimental asset markets with liquidity traders and an insider where they allow bilateral trade to take place, in addition to public trade with dealers. In the absence of the search alternative, dealer profits are large--unlike in models with risk-neutral, competitive dealers. However, when the authors allow traders to participate in the search market, dealer profits are close to zero. Dealers compete more aggressively with the alternative trading avenue than with each other. There is no evidence that price discovery is less efficient when the specialists are not the only game in town. Copyright 1997 by American Finance Association.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by American Finance Association in its journal Journal of Finance.
Volume (Year): 52 (1997)
Issue (Month): 2 (June)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Yilmaz, Ensar & Ünveren, Burak, 2011. "Income distribution and exchange in a dynamic search model," International Review of Economics & Finance, Elsevier, vol. 20(4), pages 665-678, October.
- Steven Tucker & Charles Noussair & Charles N. Noussair & Steven Tucker, 2013.
"Experimental Research On Asset Pricing,"
Journal of Economic Surveys,
Wiley Blackwell, vol. 27(3), pages 554-569, 07.
- Jianjun Miao, 2006.
"A search model of centralized and decentralized trade,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 9(1), pages 68-92, January.
- Junjian Miao, . "A search model of centralized and decentralized trade," Boston University - Department of Economics - Macroeconomics Working Papers Series WP2005-012, Boston University - Department of Economics, revised Oct 2005.
- Jianjun Miao, 2004. "A Search Model of Centralized and Decentralized Trade," Microeconomics 0410003, EconWPA.
- Jianjun Miao, 2005. "A Search Model of Centralzied and Decentralized Trade," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-144, Boston University - Department of Economics.
- de Jong, Cyriel & Koedijk, Kees & Schnitzlein, Charles, 2002. "Stock Market Quality in the Prescence of a Traded Option," CEPR Discussion Papers 3173, C.E.P.R. Discussion Papers.
- Darrell Duffie & Nicolae Garleanu & Lasse Heje Pedersen, 2005.
Econometric Society, vol. 73(6), pages 1815-1847, November.
- Battalio, Robert & Holden, Craig W., 2001. "A simple model of payment for order flow, internalization, and total trading cost," Journal of Financial Markets, Elsevier, vol. 4(1), pages 33-71, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.