Fragmentation in trader preferences among multiple markets: market coexistence versus single market dominance.

ABSTRACT: Technological advancement has led to an increase in the number and type of trading venues and a diversification of goods traded. These changes have re-emphasized the importance of understanding the effects of market competition: does proliferation of trading venues and increased competition lead to dominance of a single market or coexistence of multiple markets? In this paper, we address these questions in a stylized model of zero-intelligence traders who make repeated decisions at which of three available markets to trade. We analyse the model numerically and analytically and find that the traders' decision parameters-memory length and how strongly decisions are based on past success-make the key difference between consolidated and fragmented steady states of the population of traders. Al

SUBMITTER: Nicole R 

PROVIDER: S-EPMC8371365 | biostudies-literature | 2021 Aug

REPOSITORIES: biostudies-literature