Consolidation, Fragmentation, and Market Performance
- 1 June 1987
- journal article
- Published by JSTOR in Journal of Financial and Quantitative Analysis
- Vol. 22 (2) , 189
- https://doi.org/10.2307/2330712
Abstract
This paper studies the impact of market consolidation or fragmentation on its performance, examining four alternative models of exchange: a consolidated clearing house, fragmented clearing houses, a monopoly dealer market, and an interdealer market. The effects of the market mechanism on the expected quantity traded, the price variance faced by individual traders, the quality of market price signals, the expected gains from trade, and the exchange implementation costs are studied.Keywords
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