Technology, Transactions Costs, and Investor Welfare: Is a Motley Fool Born Every Minute?

Washington University Law Quarterly Symposium on Electronic Technology and Securities Regulation, Vol. 75, No. 2, 1997

Posted: 12 May 1997

See all articles by Lynn A. Stout

Lynn A. Stout

Cornell Law School - Jack G. Clarke Business Law Institute (deceased)

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Abstract

Computer network technology promises to revolutionize the secondary securities market and particularly to reduce dramatically the marginal costs associated with trading corporate equities. Lowering the transactions costs usually is presumed to increase trader welfare. Certain unique characteristics of the secondary securities market suggest, however, that reducing the marginal costs associated with trading stocks may have the perverse ad counterintuitive effect of decreasing investor welfare. Policymakers should consider this possibility as they respond to the market's rapid evolution.

JEL Classification: G18, K22

Suggested Citation

Stout, Lynn A., Technology, Transactions Costs, and Investor Welfare: Is a Motley Fool Born Every Minute?. Washington University Law Quarterly Symposium on Electronic Technology and Securities Regulation, Vol. 75, No. 2, 1997, Available at SSRN: https://ssrn.com/abstract=10444

Lynn A. Stout (Contact Author)

Cornell Law School - Jack G. Clarke Business Law Institute (deceased)

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