The Limits of Multi-Dealer Platforms

44 Pages Posted: 1 Sep 2022 Last revised: 2 Oct 2022

See all articles by Chaojun Wang

Chaojun Wang

University of Pennsylvania - The Wharton School

Date Written: August 24, 2022


On many important multi-dealer platforms, customers mostly request quotes from very few dealers. I build a model of multi-dealer platforms where dealers strategically choose to respond or ignore a request. If the customer contacts more dealers, every dealer responds with a lower probability and offers a stochastically worse price when responding. These two negative effects overturn the customer's benefit from potentially receiving more quotes, worsening her overall price. In equilibrium, the customer contacts only two dealers. Multi-dealer platforms are limited in their ability to promote price competition: No alternative design of information disclosure can improve the customer's payoff above this outcome.

Keywords: Over-the-counter, multi-dealer platforms, request for quote, pre-trade transparency

JEL Classification: D44, D47, D83

Suggested Citation

Wang, Chaojun, The Limits of Multi-Dealer Platforms (August 24, 2022). Available at SSRN: or

Chaojun Wang (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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