Centre for Development Economics
and
Department of Economics,
Delhi School of Economics
ANNOUNCE A SEMINAR
To talk or not? Competitive effects of information exchange between market makers
by
Kadambari Prasad (Vice President, Compass Lexecon)
Thursday, 29 July 2021 at 3:00 PM IST
Abstract:-
Exchanging information between competitors is traditionally thought of as welfare decreasing because it allows them to coordinate their prices, to the detriment of consumers. In several antitrust jurisdictions, this is thought of as similar to cartel activity and has been accompanied by hefty fines. In this paper we develop a theoretical model to assess the extent to which this logic holds in the context of market making in financial markets where the true price may not be known. Exchange of information then can allow market makers to price their securities correctly, even if it results in coordination.