Innovation in decentralized markets: Technology versus synthetic products
By: Rostek, Marzena and Yoon, Ji Hee
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Material type: 
BookPublisher: American Economic Journal: Microeconomics Description: 16(1), Feb, 2024: p.63-109.
In:
American Economic Journal: MicroeconomicsSummary: Advances in market-clearing technology for multiple assets and synthetic products present alternative ways to leverage complementarities and substitutabilities in asset payoffs. This paper compares their equilibrium and welfare effects. In competitive markets, either instrument can mimic the efficient design. When traders have price impact, however, synthetic products and market-clearing technology provide separate instruments for impacting markets' performance and can generate synergies or trade-offs. Neither instrument can generally reproduce the other's payoffs state by state. Moreover, innovation in market clearing renders additional synthetic products nonredundant. Our analysis points to the advantages of each type of innovation while also exposing potential risks.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/mic.20220138#:~:text=Abstract,can%20mimic%20the%20efficient%20design.
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 16(1), Feb, 2024: p.63-109 | Available | AR131735 |
Advances in market-clearing technology for multiple assets and synthetic products present alternative ways to leverage complementarities and substitutabilities in asset payoffs. This paper compares their equilibrium and welfare effects. In competitive markets, either instrument can mimic the efficient design. When traders have price impact, however, synthetic products and market-clearing technology provide separate instruments for impacting markets' performance and can generate synergies or trade-offs. Neither instrument can generally reproduce the other's payoffs state by state. Moreover, innovation in market clearing renders additional synthetic products nonredundant. Our analysis points to the advantages of each type of innovation while also exposing potential risks.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/mic.20220138#:~:text=Abstract,can%20mimic%20the%20efficient%20design.
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