Topic: Multiplicity and Stability of OTC Market Equilibrium

Lecturer: Assistant Prof. Ji Shen, Guanghua School of Management, Beijing University

Time: 14:00-16:00 p.m. June 15th, 2023

Venue: B321 Zhixin Building, Central Campus

Abstract: The paper explores the equilibria in a stylized search model where investors' trading needs are due to time varying valuations. There always exists a trivial equilibrium where no investor chooses to trade. When search costis small, there exists another equilibrium in which traders with medium trading needs serve the role of intermediary in the market. However, when search cost is large, there exists the other equilibrium where all traders stay outside the market after trade. When search friction is sufficiently small, only the second equilibrium is stable, in the sense that investors' trading behavior is robust to some exogenous perturbations on the side of their trading partners.