The Informational Role of Upstairs and Downstairs Trading

Sanford Grossman

The Journal of Business, 1992, vol. 65, issue 4, 509-28

Abstract: The author assumes that customers do not continuously participate in all markets and that intermediaries are repositories of information about the ("unexpressed") demands of currently nonparticipating customers. A model of downstairs (i.e., centralized) versus upstairs (i.e., fragmented) markets is developed based on the assumption that upstairs (and not downstairs) dealers may possess information about unexpressed demand. The equilibrium liquidity of both markets is characterized by the trade-off between the benefits of information about unexpressed demand and the cost to the customer of trading in a fragmented market. Copyright 1992 by University of Chicago Press.

Date: 1992
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Related works:
Working Paper: THE INFORMATION ROLE OF UPSTAIRS AND DOWNSTAIRS TRADING (1990)
Working Paper: The Informational Role of Upstairs and Downstairs Trading
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Persistent link: https://EconPapers.repec.org/RePEc:ucp:jnlbus:v:65:y:1992:i:4:p:509-28

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