Implicit collusion on wide spreads
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- dc.contributor.author Biais, Bruno
- dc.contributor.author Foucault, Thierry
- dc.contributor.author Salani, François
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2020-05-25T09:27:10Z
- dc.date.available 2020-05-25T09:27:10Z
- dc.date.issued 1995-12-01
- dc.date.modified 2020-05-25T09:16:42Z
- 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.identifier https://econ-papers.upf.edu/ca/paper.php?id=153
- dc.identifier.citation Journal of Financial Markets, 1, 523-584; October 1998
- dc.identifier.uri http://hdl.handle.net/10230/20902
- 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.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword Microeconomics
- dc.title Implicit collusion on wide spreads
- dc.type info:eu-repo/semantics/workingPaper