Cash Providers: Asset Dissemination over Intermediation Chains

Gabrielle Demange and Jean-Edouard Colliard

No 10747, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Many financial assets are disseminated to final investors via chains of over-the-counter transactions between intermediaries (dealers). We model such an intermediation process as a game with successive take-it-or-leave-it offers: An agent buying some units of an asset can offer to sell part of the volume to another OTC partner, and so on. At the equilibrium of this game, the length of intermediation chains, the terms of trade (prices and units sold) and their pattern along a chain are endogenously determined. Our model thus gives a framework to analyze how intermediation chains impact an asset's market liquidity, its issuance, and who ultimately holds the asset.

Keywords: Dealer markets; Intermediation chains; Liquidity; Otc markets (search for similar items in EconPapers)
JEL-codes: C78 D85 G21 G23 (search for similar items in EconPapers)
Date: 2015-08
New Economics Papers: this item is included in nep-ban
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Related works:
Working Paper: Cash Providers: Asset Dissemination over Intermediation Chains (2014)
Working Paper: Cash Providers: Asset Dissemination over Intermediation Chains (2014)
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