Insider Trading, Liquidity, and the Role of the Monopolist Specialist
AbstractTrading on private information creates inefficiencies because there is less than optimal risk sharing. This occurs because the response of marketmakers to the existence of traders with private information is to reduce the liquidity of the market. The institution of the monopolist specialist may ease this inefficiency somewhat by increasing the liquidity of the market. While competing marketmakers will expect a zero profit on every trade, the monopolist will average his profits across trades. This implies a more liquid market when there is extensive trading on private information. Copyright 1989 by the University of Chicago.
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.
Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Business.
Volume (Year): 62 (1989)
Issue (Month): 2 (April)
Contact details of provider:
Web page: http://www.journals.uchicago.edu/JB/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral 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: (Journals Division).
If references are entirely missing, you can add them using this form.