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Author: | Gehrig, T. Jackson, M. |
Title: | Bid-ask spreads with indirect competition among specialists |
Journal: | Journal of Financial Markets
1998 : APR, VOL. 1:1, p. 89-49 |
Index terms: | COMPETITION STOCK MARKETS STOCK EXCHANGES |
Language: | eng |
Abstract: | The authors examine the prices quoted by specialists or dealers who have monopoly power to set prices (bids and asks) for a given asset, but who face indirect competition from other specialists who trade in related assets. In the context of a simple model where investors have mean-variance preferences, the authors characterize the equilibrium bids and asks quoted by K specialists in N assets, where some specialists may control more than one asset. They compare the equilibrium spreads as the number and factor structure of the assets each specialist controls is varied. |
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