Author(s)
Ricardo Ribeiro
Source
NET Institute Working Paper #09-35
Summary
This paper looks at whether fostering competition between alternative trading venues impacts competition.
Policy Relevance
The interaction between competition and economic growth is well established. The last few years have witnessed a ferocious promotion of competition in a large spectrum of markets. This paper analyzes what methods are necessary to witness an increase in actual competition.
Main Points
- This paper argues that fostering potential competition in the cash trading market may not have an impact on the degree of actual competition in the market, since both direct network effects and post-trading constraints act as barriers to actual competition.
- This paper empirically addresses the following:
- It evaluates the actual degree of competition between trading venues;
- It measures the impact of network effects on competition; and
- It assesses the barriers to competition induced by the bundle of trading and post-trading services.
