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A Supply-Lock Competitive Market for Investable Products

Yong-Bo Wang and Jin-Ray Lu
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Yong-Bo Wang: Department of Financial Management, Sanya University, China
Jin-Ray Lu: Department of Finance, National Dong Hwa University, Taiwan

Asian Development Policy Review, 2016, vol. 4, issue 4, 127-133

Abstract: We propose a new market structure, a supply-lock competition (SLC), for analyzing transactions of investable goods. This study explains and analyzes how the SLC is applicable for transactions of stock, art, real estate, currency, and scarce goods. We suggest that the formation and fluctuation of the market price for these investable assets are not only related to their intrinsic values or investors? behavior, but are also derived from supply restriction. A mechanism of the SLC market structure benefits market efficiency but also continues volatility of asset prices in secondary markets as well. We demonstrate that a demand orientation dominates the valuation of investable assets, resulting in a divergence of market price and intrinsic value.

Keywords: Stock market; Market structure; Supply-lock market; Competitive market; Investable goods; Scarce goods. (search for similar items in EconPapers)
Date: 2016
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