Market Making with Costly Monitoring: An Analysis of the SOES Controversy

This article presents a model of information monitoring andmarket making in a dealership market. We model how intensivelydealers monitor public information to avoid being picked offby professional day traders when monitoring is costly. Pricecompetition among dealers is hampered by their incentives toshare monitoring costs. The risk of being picked off by theday traders makes dealers more competitive. The interactionbetween these effects determines whether a firm quote rule improvestrading costs and price discovery. Our empirical results supportthe prediction that professional day traders prefer stocks withsmall spreads, but offer less support for the prediction thattheir trading leads to wider spreads.     

Robert B. Ekelund Jr., Robert F. Hebert, and Robert D. Tollison. The Marketplace of Christianity

Was the Protestant Reformation "a successful penetration ofa religious market dominated by a monopoly firm" (Roman Catholicism),resulting in "product differentiation" and a multitude of innovativeconsumer choices (Protestant denominations)? Did Christianityevolve "to satisfy the changing demands of consumers/worshippers"(viii)? Anticipating that many might wince at such a worldly,even profane exposition, the authors endeavor throughout mostof the book (save for the problematic final chapter) to avoidvalue judgments about the faith via reasoned economics. Thisbook builds