The Highest Price Ever: The Great NYSE Seat Sale of 1928 1929 and Capacity Constraints
AbstractDuring the 1920s the New York Stock Exchange s position as the dominant American exchange was eroding. Costs to customers, measured as bid-ask spreads, spiked when surging inflows of orders collided with the constraint created by a fixed number of brokers. The NYSE s management proposed and the membership approved a 25 percent increase in the number of seats by issuing a quarter-seat dividend to all members. An event study reveals that the aggregate value of the NYSE rose in anticipation of improved competitiveness. These expectations were justified as bid-ask spreads became less sensitive to peak volume days.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal The Journal of Economic History.
Volume (Year): 67 (2007)
Issue (Month): 03 (September)
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Other versions of this item:
- Lance E. Davis & Larry Neal & Eugene N. White, 2005. "The Highest Price Ever: The Great NYSE Seat Sale of 1928-1929 and Capacity Constraints," NBER Working Papers 11556, National Bureau of Economic Research, Inc.
- N2 - Economic History - - Financial Markets and Institutions
- G2 - Financial Economics - - Financial Institutions and Services
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