Technology, Information Production, and Market Efficiency
37 Pages Posted: 9 Oct 2001
Date Written: September 2001
Abstract
A well functioning securities market relies on the availability of accurate information, a broad base of investors who can process this information, legal protection of these investors' rights and a liquid secondary market unencumbered by excessive transaction costs or constraints. When these conditions are satisfied, securities markets are likely to be broader and more efficient, with felicitous consequences for investment and resource allocation. This paper explores the effect of technological advances on these features of the market, emphasizing the incentives facing the producers of financial information.
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