search query: @author Marx, L. M. / total: 2
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| Author: | Kandel, E. Marx, L. M. |
| Title: | Nasdaq market structure and spread patterns |
| Journal: | Journal of Financial Economics
1997 : JUL, VOL. 45:1, p. 61-89 |
| Index terms: | MARKET STRUCTURE DEALER SPREADS FINANCIAL MODELS |
| Language: | eng |
| Abstract: | The Nasdaq market does not fit in the standard competitive model because of its institutional features. A model is constructed that reflects the characteristics of the Nasdaq market: it implies that in dealer markets with a minimum price increment, competition among market-makers does not necessarily drive spreads down to the level of marginal cost. Using this result, an explanation is provided for the odd-eight avoidance. The paper shows that market-makers can use odd-tick avoidance as a coordination device to increase spreads. The hypothesis is supported by evidence from Nasdaq. |
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