On the limits to speculation in centralized versus decentralized market regimes

Simple item page
dc.contributor.authorZurita, F
dc.date.accessioned2025-01-21T01:07:52Z
dc.date.available2025-01-21T01:07:52Z
dc.date.issued2004
dc.description.abstractSpeculation creates an adverse selection cost for utility traders, who will choose not to trade if this cost exceeds the benefits of using the asset market. However, if they do not participate, the market collapses, since private information alone is not sufficient to create a motive for trade. There is, therefore, a limit to the number of speculative transactions that a given market can support. This paper compares this limit in decentralized, monopoly-intermediated and competitively-intermediated market regimes, finding that the second regime is best equipped to deal with speculation: an informed monopolist can price-discriminate investors and thus always avoid market breakdowns. These regimes are also compared in terms of welfare and trading volume. The analysis suggests a reason for the presence of intermediaries in financial markets. (C) 2003 Elsevier Inc. All rights reserved.
dc.fuente.origenWOS
dc.identifier.doi10.1016/j.jfi.2003.10.002
dc.identifier.issn1042-9573
dc.identifier.urihttps://doi.org/10.1016/j.jfi.2003.10.002
dc.identifier.urihttps://repositorio.uc.cl/handle/11534/96392
dc.identifier.wosidWOS:000222100400004
dc.issue.numero3
dc.language.isoen
dc.pagina.final408
dc.pagina.inicio378
dc.revistaJournal of financial intermediation
dc.rightsacceso restringido
dc.subjectspeculation
dc.subjectadverse selection
dc.subjectcentralized markets
dc.subject.ods08 Decent Work and Economic Growth
dc.subject.odspa08 Trabajo decente y crecimiento económico
dc.titleOn the limits to speculation in centralized versus decentralized market regimes
dc.typeartículo
dc.volumen13
sipa.indexWOS
sipa.trazabilidadWOS;2025-01-12
Files
Collections
Artículos de revistas