A model of market-making with imperfect information

Although the prevention of false markets is one of the major concerns of stock market authorities in the UK and elsewhere, until recently, the theoretical literature on the workings of markets with imperfect information has been sparse. This paper analyses the problem of providing liquidity to investors when price-sensitive information is unequally distributed. Specifically we shall model the activities of a market-maker when certain traders have price-sensitive information unavailable to other market participants. Our model will show how the bid-asked spread would be determined in such a market. It is useful in explaining certain tactics employed by stock market traders and in suggesting alternative ways of evaluating market efficiency. The theory is developed in three sections: (1) the determination of the bid-asked spread for a single, isolated transaction; (2) the determination of the bid-asked spread in a continuous market; (3) the relationship between the spread and the size of transaction.     

PROJECTING CANADIAN DAIRY FARM STRUCTURE USING MARKOV PROCESSES

This paper reports on an application of the Markov chain process to an analysis of the size structure of the primary Canadian dairy industry. On the basis of observed changes in the size distribution of "census" farms with milk cows from 1961 to 1966, projections were made of the numbers of these farms by herd size for the years 1971 and 1981. It is projected that by the year 1981 there will be 109,200 farms with milk cows in Canada, a 51 per cent decline from the numbers in 1966. All of the decrease will occur in the smaller size herds of less than 33 cows. Farms with herd sizes larger than this are expected to increase in numbers. Projections were made separately for Ontario and Quebec.     

ACCOUNTING FOR THE PUBLIC SECTOR IN DEVELOPMENT PLANNING

This paper seeks to set out in some detail an accounting structure for the public sector of developing countries which will provide the information essential for development planning. The public sector is of course of special importance in planning because of its sheer size and its pivotal position for altering the contours of the entire economy. Yet the information available for this strategic area often falls far short of what is needed, and also of what could be provided with more effort.
The paper is divided into a number of sections, the first two of which are concerned with demarcating the public sector and with the nature of the accounting framework proposed. These are followed by sections dealing with the distinction between development and other expenditures; the need for separate financial information; public enterprises; the grouping of expenditures according to the purposes served; and income distribution. A final section touches briefly on some of the data problems involved in implementing the system. In addition, a full set of accounts for the public sector and its components is appended.