On November 17, 1998, trading commenced in DaimlerChrysler ordinary shares, a single global registered share (GRS) certificate, on stock exchanges around the world. The GRS quotes, trades and settles in U.S. Dollars on the New York Stock Exchange and in Deutschemarks/Euros on the Frankfurt Stock Exchange through a new global share registrar linking German and U.S. registrars and clearing facili...

We consider a market for storable pollution permits in which a large agent and a fringe of small agents gradually consume a stock of permits until they reach a long-run emissions limit. The subgame-perfect equilibrium exhibits no market power unless the large agent’s share of the initial stock of permits exceeds a critical level. We then apply our theoretical results to a global market for carb...

We develop a multisector sticky-price DSGE model that can endogenously deliver differential responses of prices to aggregate and sectoral shocks. Input-output production linkages (standard) monetary policy rule contribute slow response In turn, labor market segmentation at the level induces within-sector strategic substitutability in price-setting decisions, which helps fast sector-specific est...

Simple exchange experiments have revealed that participants trade their endowment less frequently than standard demand theory would predict. List (2003a) finds that the most experienced dealers acting in a well-functioning market are not subject to this exchange asymmetry, suggesting that a significant amount of market experience is required to overcome it. In order to understand this market-ex...

The purpose of this paper is to suggest a new theory of portfolio selection which is based on evolutionary reasoning in simple repeated market situations. According to this new point of view the ultimate success of a portfolio strategy is measured by the wealth share the strategy is eventually able to conquer in an evolutionary process of market selection. We identify a simple portfolio strateg...

The purpose of this paper is to suggest a new theory of portfolio selection which is based on evolutionary reasoning in simple repeated market situations. According to this new point of view the ultimate success of a portfolio strategy is measured by the wealth share the strategy is eventually able to conquer in an evolutionary process of market selection. We identify a simple portfolio strateg...

We experimentally explore how investor decision horizons influence the formation of stock prices. We find that in long-horizon sessions, where investors collect dividends till maturity, prices converge to the fundamental levels derived from dividends through backward induction. In short-horizon sessions, where investors exit the market by receiving the price (not dividends), price levels and pa...

We analyze a simple sunspot model that represents a standard securities market without sidebets on an exogenous sunspot event. The multiple self–fulfilling equilibria that arise in the model are based on investors’ uncertainty about other investors’ beliefs. Hence, these multiple equilibria are “endogenous sunspots.” We show that endogenous sunspots can arise even with complete markets to which...

A dealer needs access to order flow and information to make a market profitably in a Nasdaq stock. Several variables that proxy for the stocks that an individual market maker’s brokerage customers trade, including volume, location, underwriting participation and analyst coverage, are significant determinants of market making activity. Informational advantages may also factor in the market makin...

Contracts that reference rivals have long been a focus of antitrust law and the subject of intense scholarly debate. This paper compares two such contracts, exclusive-dealing contracts and market-share contracts, in a model of naked exclusion. We discuss the different mechanisms through which each works and identify the fundamental tradeoff that arises: marketshare contracts are better at maxim...