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  5. Imperfect Competition in Financial Markets: Recent Developments

Journal of Economic Literature

ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)

Imperfect Competition in Financial Markets: Recent Developments

  • Marzena Rostek
  • Ji Hee Yoon
Journal of Economic Literature (Forthcoming)

Abstract

This article reviews the theory of imperfectly competitive financial markets, with special attention to recent contributions and rapidly growing areas of research. We highlight the methodological advances that have led to a unified analytic framework for static, dynamic, centralized, and decentralized markets. Accounting for imperfect competition has not only reshaped our understanding of financial market data but also underscored the importance of market structure, motivated novel policy tools and objectives, and opened new avenues for market design. We identify areas where new models and techniques could enable further progress on equilibrium and market design analyses for markets with large players.

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