Diversity of Opinion and Financing of New Technologies ∗

  title={Diversity of Opinion and Financing of New Technologies ∗},
  author={Franklin Allen and Douglas Gale},
The objective of this paper is to compare the effectiveness of financial markets and financial intermediaries in financing new industries and technologies in the presence of diversity of opinion. In markets, investors become informed about the details of the new industry or technology and make their own investment decisions. In intermediaries, the investment decision is delegated to a manager, who is the only one who needs to become informed, which saves on information costs, but investors may… CONTINUE READING
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