Publications [#267002] of Leslie M. Marx

Journal Articles

1. Kandel, E; Marx, LM, Nasdaq market structure and spread patterns, Journal of Financial Economics, vol. 45 no. 1 (January, 1997), pp. 61-89, Elsevier BV [doi]
   (last updated on 2026/01/15)

   Abstract:
   Because of its institutional features, the Nasdaq market does not fit the standard competitive model. We construct a model that reflects the distinguishing characteristics of the Nasdaq market. This model implies that in dealer markets with a minimum price increment, competition among market-makers does not necessarily drive spreads down to the level of marginal cost. Using this result, we provide an explanation for the odd-eighth avoidance documented in Christie and Schultz (1994). We show that market-makers can use odd-tick avoidance as a coordination device to increase spreads. Evidence from Nasdaq supports our hypotheses.