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On the Economic Effects of Competition between Double Auction Markets

  • Kai Cai
  • Jinzhong Niu
  • Simon Parsons
Conference paper
Part of the Lecture Notes in Business Information Processing book series (LNBIP, volume 44)

Abstract

Real market institutions, stock and commodity exchanges for example, do not occur in isolation. The same stocks and commodities may be listed on multiple exchanges, and traders who want to deal in those goods have a choice of markets in which to trade. While there has been extensive research into agent-based trading in individual markets, there is little work on this kind of multiple market scenario. Our work seeks to address this imbalance. In particular, this paper examines how allocative efficiency, the standard measure of a market’s ability to extract surplus, is affected by the presence of multiple markets for the same good. We find that while dividing traders between several small markets typically leads to lower efficiency than grouping them into one large market, the movement of traders between markets, and price incentives for changing markets, can reduce this loss of efficiency.

Keywords

Equilibrium Price Trading Strategy Single Market Double Auction Trading Agent 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2010

Authors and Affiliations

  • Kai Cai
    • 1
  • Jinzhong Niu
    • 1
  • Simon Parsons
    • 1
    • 2
  1. 1.Department of Computer ScienceGraduate Center City University of New YorkNew YorkUSA
  2. 2.Department of Computer and Information Science Brooklyn CollegeCity University of New YorkBrooklynUSA

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