Simultaneous Multilateral Search

91 Pages Posted: 6 Jun 2019 Last revised: 6 Oct 2021

Date Written: October 5, 2021

Abstract

This paper studies simultaneous multilateral search (SMS) in over-the-counter markets: When searching, a customer simultaneously contacts several dealers and trades with the one offering the best quote. Higher search intensity (how often one can search) improves welfare, but higher search capacity (how many dealers one can contact) might be harmful. When the market is in distress, customers might inefficiently favor bilateral bargaining (BB) over SMS. Such preference for BB speaks to the sluggish adoption of SMS trading, like request-for-quote protocols, in over-the-counter markets. Furthermore, a market-wide shift to SMS may not be socially optimal.

Keywords: request-for-quote, over-the-counter market, search, bargaining

JEL Classification: D4, G1

Suggested Citation

Glebkin, Sergei and Yueshen, Bart Zhou and Shen, Ji, Simultaneous Multilateral Search (October 5, 2021). Available at SSRN: https://ssrn.com/abstract=3389756 or http://dx.doi.org/10.2139/ssrn.3389756

Sergei Glebkin

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Bart Zhou Yueshen (Contact Author)

INSEAD - Finance ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
France

Ji Shen

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

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