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Insider Trading with Different Market Structures

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  • Wassim Daher

    ()
    (Gulf University for Science and Technology (GUST) - Department of Mathematics and Natural Sciences, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

  • Fida Karam

    ()
    (Gulf University for Science and Technology (GUST) - Department of Economics and Finance)

  • Leonard J. Mirman

    ()
    (University of Virginia - Department of Economics)

Abstract

We study an extension of Jain and Mirman (1999) with two insiders under three different market structures : (i) Cournot competition among the insiders, (ii) Stackelberg game between the insiders and (iii) monopoly in the real market and Stackelberg in the financial market. We show how the equilibrium outcomes are affected by each of the market structure. Finally we perform a comparative statics analysis between the models.

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Bibliographic Info

Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00639657.

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Date of creation: Aug 2011
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Handle: RePEc:hal:cesptp:halshs-00639657

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Related research

Keywords: Insider trading; Cournot; Stackelberg; correlated signals; Kyle model.;

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References

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  1. Daher, Wassim & Mirman, Leonard J., 2007. "Market structure and insider trading," International Review of Economics & Finance, Elsevier, Elsevier, vol. 16(3), pages 306-331.
  2. James Dow & Rohit Rahi, 1996. "Informed Trading, Investment and Welfare," Archive Working Papers, Birkbeck, Department of Economics, Mathematics & Statistics 029, Birkbeck, Department of Economics, Mathematics & Statistics.
  3. Wassim Daher & Leonard J. Mirman, 2004. "Cournot duopoly and insider trading with two insiders," Cahiers de la Maison des Sciences Economiques, Université Panthéon-Sorbonne (Paris 1) b04077, Université Panthéon-Sorbonne (Paris 1).
  4. Creane, Anthony, 1994. "Experimentation with Heteroskedastic Noise," Economic Theory, Springer, Springer, vol. 4(2), pages 275-86, March.
  5. Hayne E. Leland., 1990. "Insider Trading: Should It Be Prohibited?," Research Program in Finance Working Papers, University of California at Berkeley RPF-195, University of California at Berkeley.
  6. Wang, Leonard F.S. & Wang, Ya-Chin & Ren, Shuang, 2009. "Stackelberg financial-leader in insider trading model," International Review of Economics & Finance, Elsevier, Elsevier, vol. 18(1), pages 123-131, January.
  7. Kyle, Albert S, 1985. "Continuous Auctions and Insider Trading," Econometrica, Econometric Society, Econometric Society, vol. 53(6), pages 1315-35, November.
  8. Manove, Michael, 1989. "The Harm from Insider Trading and Informed Speculation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 104(4), pages 823-45, November.
  9. Jain, Neelam & Mirman, Leonard J., 2002. "Effects of insider trading under different market structures," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 42(1), pages 19-39.
  10. Tighe, Carla & Michener, Ron, 1994. "The Political Economy of Insider-Trading Laws," American Economic Review, American Economic Association, American Economic Association, vol. 84(2), pages 164-68, May.
  11. Ludovic Julien, 2011. "A note on Stackelberg competition," Journal of Economics, Springer, Springer, vol. 103(2), pages 171-187, June.
  12. Jain, Neelam & Mirman, Leonard J., 1999. "Insider trading with correlated signals," Economics Letters, Elsevier, Elsevier, vol. 65(1), pages 105-113, October.
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Cited by:
  1. Wassim Daher & Harun Aydilek & Fida Karam & Asiye Adydilek, 2012. "Insider trading with product differentiation," Documents de travail du Centre d'Economie de la Sorbonne, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne 12014, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  2. Lyudmila A. Glik & Oleg L. Kritski, 2014. "Finding informed traders in futures and their inderlying assets in intraday trading," Papers 1402.6583, arXiv.org.
  3. repec:hal:journl:halshs-00676502 is not listed on IDEAS

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