Showing 1 - 6 of 6
The Internet reduces the cost of exchanging information. Electronic markets exploit this opportunity to enable investors to place quotes at very little cost and compete with incumbent trading systems. Does this quasi–free entry situation lead to competitive liquidity supply? We analyze trades...
Persistent link: https://www.econbiz.de/10009441265
We examine how financial theory and economic principles offer guidance and predictions about the organization of investments and asset allocation decisions given the structure of taxes in estate--planning situations. We provide insight about many of the conventional approaches to estate planning...
Persistent link: https://www.econbiz.de/10009441144
This paper presents a competitive rational expectations model of spot and forward prices for multiple commodities that can be stored and/or converted. As a result of the conversion option, an equilibrium theory of basis spreads across commodities is derived. This extends the "theory of storage"...
Persistent link: https://www.econbiz.de/10009441298
We study how securities and trading mechanisms can be designed to optimally mitigate the adverse impact of market imperfections on liquidity. Asset owners seek to obtain liquidity by selling their claims on future cash-flows, on which they have private information. Our analysis encompasses both...
Persistent link: https://www.econbiz.de/10009439981
Speculative industries exploit novel technologies subject to two risks. First, there is uncertainty about the fundamental value of the innovation: is it strong or fragile? Second, it is difficult to monitor managers, which creates moral hazard. Because of moral hazard, managers earn agency rents...
Persistent link: https://www.econbiz.de/10009440495
Bonds are traded in over-the-counter markets, where opacity and fragmentation imply large transaction costs for retail investors. Is there something special about bonds, in contrast to stocks, precluding transparent limit-order markets? Historical experience suggests this is not the case. Before...
Persistent link: https://www.econbiz.de/10009441124