This paper analyzes how the presence of a futures market gives risk averse dealers in the spot asset opportunities for arbitrage that reduces the spot market bid-ask spread through reducing the dealers risk exposure. In particular, if the spot and futures risks are perfectly correlated then the...

We take a general model of externalities matching the Cooper & John framework with identical agents. If each agent's payoff depends on a parameter interpreted as the favourableness of the environment, we explore how the number of Nash equilibria varies with this parameter, especially in the...