Show simple item record Biais, Bruno Foucault, Thierry Salani, François
dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa 2020-05-25T09:27:10Z 2020-05-25T09:27:10Z 1995-12-01
dc.identifier.citation Journal of Financial Markets, 1, 523-584; October 1998
dc.description.abstract Recent empirical findings suggest that spreads quoted in dealership markets might be uncompetitive. This paper analyzes theoretically if price competition between risk--averse market--makers leaves room for implicit collusive behavior. We compare the spread and risk--sharing efficiency arising in several market structures differing in terms of i) the priority rule followed in case of ties, and ii) the type of schedules market makers may use, namely: general schedules, linear schedules, or limit orders. In general, competitive pricing does not arise in equilibrium, and there is a conflict between risk sharing efficiency and the tightness of the spread. This conflict can be mitigated by an appropriate market structure design. The limit order market is the only market structure in which the competitive equilibrium is the unique equilibrium.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries Economics and Business Working Papers Series; 153
dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
dc.title Implicit collusion on wide spreads
dc.type info:eu-repo/semantics/workingPaper 2020-05-25T09:16:42Z
dc.subject.keyword Microeconomics
dc.rights.accessRights info:eu-repo/semantics/openAccess


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