Instability of Centralized Markets

29 Pages Posted: 4 Aug 2017

See all articles by Ahmad Peivandi

Ahmad Peivandi

Georgia State University - Risk Management & Insurance Department

Rakesh Vohra

University of Pennsylvania - Department of Economics

Date Written: August 2, 2017

Abstract

Centralized markets reduce the costs of search for buyers and sellers. Their ‘thickness’ increases the chance of order execution at competitive prices. In spite of the incentives to consolidate, some markets, securities markets and online advertising, being the most notable, are fragmented into multiple trading venues. We argue that fragmentation is an inevitable feature of any centralized market except in certain special circumstances.

Suggested Citation

Peivandi Karizbodaghi, Ahmad and Vohra, Rakesh, Instability of Centralized Markets (August 2, 2017). Available at SSRN: https://ssrn.com/abstract=3012889 or http://dx.doi.org/10.2139/ssrn.3012889

Ahmad Peivandi Karizbodaghi (Contact Author)

Georgia State University - Risk Management & Insurance Department ( email )

P.O. Box 4036
Atlanta, GA 30302-4036
United States

Rakesh Vohra

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

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