Publication:
Who acquires information in dealer markets?

Loading...
Thumbnail Image
Identifiers
Publication date
2020-04-01
Defense date
Advisors
Tutors
Journal Title
Journal ISSN
Volume Title
Publisher
American Economic Association
Impact
Google Scholar
Export
Research Projects
Organizational Units
Journal Issue
Abstract
We study information acquisition in dealer markets. We first identify a one- sided strategic complementarity in information acquisition: the more informed traders are, the larger market makers’ gain from becoming informed. When quotes are observable, this effect in turn induces a strategic complementarity in information acquisition amongst market makers. We then derive the equilibrium pattern of information acquisition and examine the implications of our analysis for market liquidity and price discovery. We show that increasing the cost of information can decrease market liquidity and improve price discovery.
Description
Keywords
Bibliographic citation
Rüdiger, J., & Vigier, A. (2020). Who Acquires Information in Dealer Markets? En American Economic Review, 110 (4), pp. 1145-1176.