IDEAS home Printed from https://ideas.repec.org/a/oup/restud/v60y1993i3p735-751..html
   My bibliography  Save this article

Price Competition between Market Makers

Author

Listed:
  • Jürgen Dennert

Abstract

The paper explicitly models price competition in financial markets in which prices are quoted by competing dealers before future demand is observed. The strategic behaviour of informed insiders and uninformed liquidity traders implies that a growing number of market makers leads to a higher risk exposure for the individual market maker which induces higher individual bid-ask-spreads and higher transaction costs for the liquidity traders. Under certain conditions liquidity traders would prefer a monopolistic market maker rather than several competing market makers. The results hold under various assumptions on the strategy space of the market makers.

Suggested Citation

  • Jürgen Dennert, 1993. "Price Competition between Market Makers," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(3), pages 735-751.
    • Handle: RePEc:oup:restud:v:60:y:1993:i:3:p:735-751.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.2307/2298133
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:restud:v:60:y:1993:i:3:p:735-751.. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/restud .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.