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Journal Article
The consolidation of European stock exchanges
With the growing appeal of cross-border trading in Europe, efforts are under way to establish consolidated exchanges that offer trading in stocks from many European countries. An analysis of these evolving pan-European exchanges suggests that consolidation could reduce the costs and complications of cross-border trading through such enhancements as a standardization of trading platforms. Yet regulatory, legal, and economic barriers to the creation of these exchanges may delay any benefits of consolidation.
Journal Article
Why hasn't electronic bill presentment and payment taken off?
The delivery and payment of bills over the Internet could offer many advantages?low processing costs and enhanced marketing opportunities for billers, savings in time and postage for customers. Nevertheless, electronic billing has not found favor with potential users. A lack of coordination among billers and customers, combined with the high fixed costs of the new technology, may help account for the cool reception.
Journal Article
The emergence of electronic communications networks in the U.S. equity markets
Recent regulatory and technological changes have spurred the development of automated trading systems known as ECNs, or electronic communications networks. Proponents of the networks contend that ECNs can cut transaction costs, accelerate trade execution, and expand the price information available to investors. While some critics have questioned the effects of the ECNs on market integration, it is clear that the networks are poised to play an increasingly important role in the new electronic environment.
Report
Sunk costs, contestability, and the latent contract market
The idea that an industry with sunk costs may be contestable even in the absence of long-term contracts has received little attention from formal economic theory yet is popular among monopolists facing antitrust suits. The paper formally illustrates the argument. In an infinitely repeated game, there exists a class of contestable outcomes in which the monopolist sells only on the spot market and charges low prices along the equilibrium path to prevent customers from resorting to long-term contracts. Then, the crucial test for contestability is the level of transaction costs in the latent ...