%0 Journal Article %T Floors, dealer markets and limit order markets %+ GSIA, Carnegie Mellon University %A Foucault, Thierry %A Biais, Bruno %A Salanie, Francois %< avec comité de lecture %@ 1386-4181 %J Journal of Financial Markets %I Elsevier %V Vol.1, n°3-4 %P pp. 253-284 %8 1998 %D 1998 %R 10.1016/S1386-4181(98)00003-2 %K Floor markets %K Dealer markets %K Limit orders %K Market design %K Tacit collusion %Z Humanities and Social Sciences/Business administration/domain_shs.gestion.finJournal articles %X In dealer markets, liquidity suppliers have entire flexibility to bargain on the price with their customers. In limit order markets, they are restricted to convex schedules: they cannot sell the first share at a higher price than the second. Floor traders simply respond to the liquidity demand conveyed by brokers by crying out one price. In floor markets risk-sharing is inefficient and spreads are large. In dealer markets, risk-sharing can be efficient, but spreads tend to be large. In limit order markets, the unique equilibrium entails efficient risk-sharing and competitive spreads. Hence there is a non-monotonic relation between the efficiency of the market and the extent to which the offers of the liquidity suppliers are restricted. %G English %L hal-00481194 %U https://hec.hal.science/hal-00481194 %~ SHS %~ HEC