Competition and collusion in dealer markets

• 成果类型: Article
• 署名作者: Dutta, PK; Madhavan, A
• 署名单位: University of Southern California
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.2307/2329563
• 发表日期: 1997
• 页码: 245-276
• 关键词: ODD-8TH QUOTES; repeated games

摘要

This article develops a game-theoretic model to analyze market makers' intertemporal pricing strategies. We show that dealers who adopt noncooperative pricing strategies may set bid-ask spreads above competitive levels. This form of ''implicit collusion'' differs from explicit collusion, where dealers cooperate to fix prices. Price discreteness or asymmetric information are not required for collusion to occur. Rather, institutional arrangements that restrict access to the order now are important determinants of the ability to collude because they reduce dealers' incentives to compete on price. Public policy efforts to increase interdealer competition should focus on such restrictions.