Sale of Price Information by Exchanges: Does it Promote Price Discovery?

@article{Cespa2014SaleOP,
  title={Sale of Price Information by Exchanges: Does it Promote Price Discovery?},
  author={Giovanni Cespa and Thierry Foucault},
  journal={Capital Markets: Market Efficiency eJournal},
  year={2014}
}
Exchanges sell both trading services and price information. We study how the joint pricing of these products affects price discovery and the distribution of gains from trade in an asset market. A wider dissemination of price information reduces pricing errors and the transfer from liquidity traders to speculators. This effect reduces the fee that speculators are willing to pay for trading. Therefore, to raise its revenue from trading, a for-profit exchange optimally charges a high fee for price… 
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