Asset Dissemination Through Dealer Markets

Jean-Edouard Colliard and Gabrielle Demange

No 1296, HEC Research Papers Series from HEC Paris

Abstract: Many financial assets are disseminated to final investors via chains of over-the-counter transactions between dealers. We model such an intermediation process as a game with successive take-it-or-leave-it offers: A dealer buys several units of an asset, and can sell some of them to his customers or to a second dealer, who can sell to his customers or to a third dealer, and so on. In equilibrium, the asset is disseminated through a sequence of OTC transactions between dealers. The number of dealers involved, the inventories they keep, and the prices and quantities they offer are endogenously determined. Our model gives a framework to analyze how assets are disseminated through OTC markets, how liquidity evolves along a sequence of transactions, and varies across different sequences of different lengths.

Keywords: intermediation chains; liquidity; OTC markets; dealer markets (search for similar items in EconPapers)
JEL-codes: C78 D85 G21 G23 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2018-07-27
New Economics Papers: this item is included in nep-gth
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Asset Dissemination Through Dealer Markets (2021)
Working Paper: Asset Dissemination Through Dealer Markets (2021)
Working Paper: Asset Dissemination Through Dealer Markets (2021)
Working Paper: Asset Dissemination Through Dealer Markets (2018)
Working Paper: Asset Dissemination Through Dealer Markets (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1296

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