Germain, Laurent Strategic Noise in Competitive Markets for the Sale of Information. (2005) Journal of Financial Intermediation, 14 (2). 179-209. ISSN 1042-9573
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(Document in English)
PDF (Author's version) - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader 347kB |
Official URL: http://dx.doi.org/10.1016/j.jfi.2005.03.001
Abstract
This paper shows how informed financial intermediaries can reduce their trading competition by designing optimal incentive compatible contracts for the sale of information. With fund management contracts – indirect sale of information – banks can credibly commit to collaborate and add noise into prices. This is a way to circumvent the Grossman and Stiglitz (1980) paradox: when information is costly, by commiting to add noise, the banks can recover the cost of collecting information and enter the market. By contrast, when information is costless, even with a large number of sellers of information entering the market prices are not fully informative.
| Item Type: | Article |
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| Additional Information: | Thanks to Elsevier editor. The definitive version is available at http://www.sciencedirect.com The original PDF of the article can be found at: http://www.sciencedirect.com/science/article/pii/S1042957305000082 |
| Audience (journal): | International peer-reviewed journal |
| Uncontrolled Keywords: | |
| Institution: | Université de Toulouse > Institut Supérieur de l'Aéronautique et de l'Espace - ISAE-SUPAERO (FRANCE) Université de Toulouse > Toulouse Business School - TBS (FRANCE) |
| Laboratory name: | |
| Statistics: | download |
| Deposited On: | 11 Jul 2012 13:39 |
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