Dispersed Trading and the Prevention of Market Failure: The Case of the Copenhagen Stock Exchange

David C. Porter (), Carsten Tanggaard (), Daniel G. Weaver () and Wei Yu ()
Additional contact information
David C. Porter: College of Business and Economics, Postal: Department of Finance and Business Law, University of Wisconsin-Whitewater, Whitewater, WI 53190,
Carsten Tanggaard: Department of Business Studies, Aarhus School of Business, Postal: The Aarhus School of Business, Fuglesangs Allé 4, 8210 Aarhus V, Denmark, http://www.asb.dk/staff/bs/cat.aspx?page=%7B803EFF10-69F7-4C0F-AEE3-F7F410E4B6F2%7D
Daniel G. Weaver: Department of Finance, Postal: Rutgers Business School, Rutgers University, 94 Rockafeller Road, Priscataway, NJ 08854-8054
Wei Yu: Department of Finance, Postal: Rutgers Business School, Rutgers University, 94 Rockafeller Road, Priscataway, NJ 08854-8054

No F-2006-97, Finance Research Group Working Papers from University of Aarhus, Aarhus School of Business, Department of Business Studies

Abstract: With augmented demands on power grids resulting in longer and larger blackouts

combined with heightened concerns of terrorist attacks, trading institutions and policy

makers have widened their search for systems that avoid market failure during these

disturbing events. We provide insight into this issue by examining trading behavior at the

Copenhagen Stock Exchange during a major blackout. We find that although market

quality declined, markets remained functional and some price discovery occurred during

the blackout period suggesting that the NOREX structure of interlinked trading systems

combined with widely dispersed trading locations may be a viable means of protection

against market failure during massive power disruptions or terrorist attacks.

Keywords: Power failure; Fragmented markets; Market failure (search for similar items in EconPapers)
Pages: 43 pages
Date: 2006-01-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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