Benchmarks in Search Markets

@article{Duffie2014BenchmarksIS,
  title={Benchmarks in Search Markets},
  author={Darrell Duffie and Piotr Dworczak and Haoxiang Zhu},
  journal={NBER Working Paper Series},
  year={2014}
}
We characterize the price-transparency role of benchmarks in over-the-counter markets. A benchmark can, under conditions, raise social surplus by increasing the volume of beneficial trade, facilitating more efficient matching between dealers and customers, and reducing search costs. Although the market transparency promoted by benchmarks reduces dealers' profit margins, dealers may nonetheless introduce a benchmark to encourage greater market participation by investors. Low-cost dealers may… 
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120 Citations
Highly Influential Citations
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Background Citations
48
Methods Citations
2
Results Citations
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120 Citations

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