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Auction and dealership markets: what is the difference?

Author

Listed:
  • Pagano, Marco
  • Röell, Ailsa

Abstract

In the 1980s, the practice of listing stocks in several exchanges has become more frequent, and as a result investors have gained access to alternative trading systems to exchange the same stock. For instance, French, Italian and Spanish "blue chip" stocks can now be traded in their domestic exchanges, organised as auction markets, as well as in the London SEAQ International market, which is a dealership market. The key difference is that while in auction markets all outstanding orders are transacted at a single price via a centralized mechanism, in dealership markets they are placed with individual dealers, who execute them at preset quoted prices.

Suggested Citation

  • Pagano, Marco & Röell, Ailsa, 1991. "Auction and dealership markets: what is the difference?," LSE Research Online Documents on Economics 119185, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:119185
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    File URL: http://eprints.lse.ac.uk/119185/
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    References listed on IDEAS

    as
    1. Ho, Thomas & Stoll, Hans R, 1980. "On Dealer Markets under Competition," Journal of Finance, American Finance Association, vol. 35(2), pages 259-267, May.
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    4. Marco Pagano, 1989. "Trading Volume and Asset Liquidity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(2), pages 255-274.
    5. Anat R. Admati, Paul Pfleiderer, 1988. "A Theory of Intraday Patterns: Volume and Price Variability," The Review of Financial Studies, Society for Financial Studies, vol. 1(1), pages 3-40.
    6. Admati, Anat R & Pfleiderer, Paul, 1991. "Sunshine Trading and Financial Market Equilibrium," The Review of Financial Studies, Society for Financial Studies, vol. 4(3), pages 443-481.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • G00 - Financial Economics - - General - - - General

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