Market Imperfections

Journal of Financial Transformation, Vol. 14, 2005

FRB Atlanta Working Paper No. 2005-12

11 Pages Posted: 16 Aug 2005  

Ramon P. DeGennaro

University of Tennessee, Knoxville - Department of Finance

Abstract

I provide a taxonomy of market imperfections built around the economic forces underlying them. Market imperfections affect virtually every transaction in some way, generating costs which interfere with trades that rational individuals make, or would make in the absence of the imperfection. Understanding these costs gives us insight regarding the total costs of transactions, where to place them, or whether to make them at all. Market imperfections also generate profit opportunities for entrepreneurs. Institutions or individuals that can lower costs which trace to imperfections have a competitive advantage and can earn economic rents - at least until competing firms adapt.

Keywords: markets, imperfections, frictions

JEL Classification: A10, D41, G10, G12, G14, G20

Suggested Citation

DeGennaro, Ramon P., Market Imperfections. Journal of Financial Transformation, Vol. 14, 2005; FRB Atlanta Working Paper No. 2005-12. Available at SSRN: https://ssrn.com/abstract=775866

Ramon P. DeGennaro (Contact Author)

University of Tennessee, Knoxville - Department of Finance ( email )

423 Stokely Management Center
Knoxville, TN 37996
United States
865-974-1726 (Phone)
865-974-1716 (Fax)

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