Working Paper: NBER ID: w18712
Authors: Eugene N. White
Abstract: Improved information technology and higher volume should drive orders to be concentrated in one market, lowering the costs of transactions. However, the opposite occurred during the bull market of the 1920s when rapid technological change spawned a flood of new issues. This paper employs newly recovered data for 1900-1933 on the volume and seat prices of regional exchanges to examine how these rivals successfully competed with the NYSE, leading to its relative decline at the zenith of the market. The history of U.S. exchanges reveals that the tendency towards concentration of trading is periodically reversed when new industries, whose technologies are risky and unfamiliar, are more easily accommodated by existing or new rivals to the dominant exchange
Keywords: No keywords provided
JEL Codes: G18; N21; N22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Entry of new technologies and firms with riskier profiles (L26) | Dilution of market share for the NYSE (G19) |
| Lenient listing and disclosure requirements of rival exchanges (G18) | Gain of market share by rival exchanges (G10) |
| Improved information technology and higher trading volumes (F69) | Concentration of orders in one market (NYSE) (G10) |