The Persistence of Dominant‐Firm Market Share: Raising Rivals' Cost on the New York Stock Exchange. (1st July 2014)

• Record Type: Journal Article
• Authors: Harris, Frederick H. deB.; Hyde, Adam S.; Wood, Robert A.
• Is Part Of: Southern economic journal. Volume 81:Number 1(2015)
• Page Start: 91
• Page End: 112
• Publication Date: 2014-07-01
• Subjects: Southern States -- Economic conditions -- Periodicals; Economics -- Periodicals; Economic history; Economics; Southern States; Periodicals; 330.975005
• DOI: 10.4284/0038-4038-2010.307
• Languages: English
• ISSNs: 0038-4038

Abstract

<abstract abstract-type="main"> <title> <x xml:space="preserve">Abstract</x> </title> <p>To explain the persistence of dominant New York Stock Exchange (NYSE) market share in stock trading of listed securities from 1992 to 2002, we develop a dominant‐firm price leadership model and hypothesize that NYSE specialists raised the costs of rival market makers. The model predicts that natural and induced cost advantages will determine the NYSE's market share vis‐à‐vis the regional exchanges, electronic trading systems, and NASDAQ dealers. Empirically, NYSE market share increases with economies of scale and scope, abnormal price volatility, high asymmetric information, and with trading practices that raise rivals' costs, such as failure to display limit orders that bettered the existing quotes.</p> </abstract>