Advanced Search
MyIDEAS: Login

Minimum Commission Rates on New York Stock Exchange Transactions


Author Info

  • Richard R. West
  • Seha M. Tinic


This article presents an economic analysis of the long-standing policy of charging minimum commissions on stock exchange transactions. The discussion draws heavily on the arguments put forward by the NYSE as a part of its recent ongoing defense of fixed commissions. These arguments fall into two categories: (1) those related to the structure of the continuous auction method, or market-making, employed by the Exchange, and (2) those related to the structure of the brokerage industry. According to the Exchange's logic, the elimination of minimum commissions would lead to a splintering of the auction market and to an increase in the concentration in the brokerage business. The analysis presented in this article leads to the conclusion that the Exchange's case is faulty in terms of both its theory and its empirical findings. It further concludes that the viability of the auction market would be somewhat improved by permitting commissions to be set on the basis of competition. In short, this article argues that minimum commission rates on stock exchange transactions cannot be justified on economic grounds but rather represent a form of monopolistic price-fixing.

Download Info

If 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.
File URL:
File Function: full text
Download Restriction: Access to full text is restricted to JSTOR subscribers. See for details.

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 Info

Article provided by The RAND Corporation in its journal Bell Journal of Economics.

Volume (Year): 2 (1971)
Issue (Month): 2 (Autumn)
Pages: 577-605

as in new window
Handle: RePEc:rje:bellje:v:2:y:1971:i:autumn:p:577-605

Contact details of provider:
Web page:

Order Information:

Related research



No references listed on IDEAS
You can help add them by filling out this form.


Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Lawrence J. White, 2006. "The Residential Real Estate Brokerage Industry: What Would More Vigorous Competition Look Like?," Working Papers 06-06, New York University, Leonard N. Stern School of Business, Department of Economics.
  2. Luke Bortoli & Alex Frino & Elvis Jarnecic, 2004. "Differences in the Cost of Trade Execution Services on Floor-Based and Electronic Futures Markets," Journal of Financial Services Research, Springer, vol. 26(1), pages 73-87, August.


This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:rje:bellje:v:2:y:1971:i:autumn:p:577-605. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

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.