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Competition and Information Leakage

Journal of Political Economy, ISSN: 1537-534X, Vol: 132, Issue: 5, Page: 1603-1641
2024
  • 1
    Citations
  • 2,906
    Usage
  • 15
    Captures
  • 1
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    1
  • Usage
    2,906
    • Abstract Views
      2,289
    • Downloads
      617
  • Captures
    15
  • Mentions
    1
    • News Mentions
      1
      • News
        1
  • Ratings
    • Download Rank
      90,826

Most Recent News

Joshua Mollner: Competition and Information Leakage Huxley Building, South Kensington Campus

When seeking to trade in over-the-counter markets, institutional investors typically restrict both the number of potential counterparties they contact and the information they disclose (e.g.,

Article Description

When seeking to trade in over-the-counter markets, institutional investors typically restrict both the number of potential counterparties they contact and the information they disclose (e.g., by requesting two-sided rather than one-sided quotes). We rationalize these important facts in a model featuring endogenous front-running. Although an additional contact inten-sifies competition and aids in finding a natural counterparty, it also inten-sifies information leakage—which can be costly if it helps a losing dealer to front-run. We also address information design: the client optimally pro-vides no information about her trading direction when requesting quotes. We conclude with implications for market design and regulation.

Bibliographic Details

Markus Baldauf; Joshua Mollner

Elsevier BV

Economics, Econometrics and Finance; Multidisciplinary; counterparty search; over-the-counter (OTC) markets; request for quotes (RFQ); trading platform design; information design; price impact; front-running

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