The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Thin Markets

  • Marzena Rostek
  • Marek Weretka
Reference work entry


A thin market is a market with few buying or selling offers. The concept of market thinness, while general, is typically used in the context of financial markets. When the number of buying or selling offers is small, investors’ trading positions are large relative to market size. Trading then requires price concessions and thus exerts an impact on prices. A thin market is characterized by low trading volume, high volatility and high bid–ask spreads. This article discusses the modelling of thin markets, some typical phenomena of such markets, and their implications for market design.


Asset pricing Blockage discount Inventory models Liquidity Market efficiency Market power Market structure Oligopoly Overshooting Predatory trading Thin markets 

JEL Classifications

D43 D53 G11 G12 G14 L13 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Marzena Rostek
    • 1
  • Marek Weretka
    • 1
  1. 1.