The Imperfection of the Trading System

Zhenying Wang ()
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Zhenying Wang: Shanghai Gold Exchange

Chapter Chapter 26 in Trading Economics, 2024, pp 583-594 from Springer

Abstract: Abstract The trading system, like all evolving systems, contains a mechanism of self-negation. We have proven that the polarization of trading power is an inevitable product of the evolution of the trading system; when polarization exceeds a certain threshold, the efficiency of resource allocation in the trading system will rapidly decay. We will also prove that we cannot build a perfect institutional system that balances fairness and efficiency in the trading system. This means that we cannot effectively prevent the metamorphosis of the trading system, nor can we guarantee the perfect evolution of the trading system.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-981-99-9875-3_26

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DOI: 10.1007/978-981-99-9875-3_26

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