Clientele, Information Sales, and Asset Prices

72 Pages Posted: 5 Sep 2017 Last revised: 13 Jul 2020

See all articles by Shiyang Huang

Shiyang Huang

The University of Hong Kong - Faculty of Business and Economics

Yan Xiong

The Hong Kong University of Science and Technology

Liyan Yang

University of Toronto - Rotman School of Management

Date Written: January 1, 2018

Abstract

We examine sales of financial market information in an economy with two information sellers. In equilibrium, the two sellers form either orthogonal or overlapping clientele, depending on the similarity of the information to be sold. When the two sellers' information is very distinct and sellers have relatively large bargaining power in sharing trading profits, investors' information purchase behavior exhibits complementarity, leading to the possibility of multiple equilibria. This result connects the complementarity in signals to strategic complementarity in actions. We also show that the information-market structure is crucial in determining asset prices and financial market quality.

Keywords: Clientele formation, information sales, complementarity, market quality

JEL Classification: G12, G14

Suggested Citation

Huang, Shiyang and Xiong, Yan and Yang, Liyan, Clientele, Information Sales, and Asset Prices (January 1, 2018). Available at SSRN: https://ssrn.com/abstract=3031386 or http://dx.doi.org/10.2139/ssrn.3031386

Shiyang Huang (Contact Author)

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Yan Xiong

The Hong Kong University of Science and Technology ( email )

HKUST
Kowloon
Hong Kong
Hong Kong

Liyan Yang

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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