Template-type: ReDif-Paper 1.0
Author-Name: Alós-Ferrer, Carlos 
Author-Name: Kirchsteiger, Georg 
Author-Name: Walzl, Markus 
Author-workplace-name: METEOR
Title: On the Evolution of Trading Institutions: The Platform Design Paradox
Abstract: This paper analyzes a learning model where sophisticated market designers create new trading platforms and boundedly rational traders select among them. We ask wether "Walrasian'''' platforms, leading to efficient (market - clearing) trading outcomes, will dominate the market in the long run. If several market designers are competing, we find that traders will learn to select non-market clearing platforms with prices systematically above the market-clearing level, provided at least one such platform is introduced by a market designer. This in turn leads all market designers to introduce such inefficient (non-market clearing) platforms. Hence platform competition induces non-competitive market outcomes. 
Keywords: economic systems ; 
Series: Research Memoranda
Creation-Date: 2006
Number: 004
File-URL: http://arnop.unimaas.nl/show.cgi?fid=4021
File-Format: application/pdf
File-Size: 407938
Handle: RePEc:unm:umamet:2006004