Publication Type

Journal Article

Version

submittedVersion

Publication Date

2-2023

Abstract

This paper studies simultaneous multilateral search (SMS) in over-the-counter markets: When searching, a customer simultaneously contacts several dealers and trades with the one offering the best quote. Higher search intensity (how often one can search) improves welfare, but higher search capacity (how many dealers one can contact) might be harmful. When the market is in distress, customers might inefficiently favor bilateral bargaining (BB) over SMS. Such a preference for BB speaks to the sluggish adoption of SMS trading, like request-for-quote protocols, in over-the-counter markets. Furthermore, a market-wide shift to SMS may not be socially optimal.

Keywords

Request-for-quote, over-the-counter market, search, bargaining

Discipline

Finance and Financial Management | Portfolio and Security Analysis

Research Areas

Finance

Publication

Review of Financial Studies

Volume

36

Issue

2

First Page

571

Last Page

614

ISSN

0893-9454

Identifier

10.1093/rfs/hhac009

Publisher

Oxford University Press

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1093/rfs/hhac009

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