Informational Externalities and Welfare-Reducing Speculation

摘要: Introducing more speculators into the market for a given commodity leads to improved risk sharing but can also change informational content of prices. This inflicts an externality on those traders already in market, whose ability make inferences based current prices will be aff ected. In some cases, is negative: entry new s peculators lowers informativeness price existing trader s. The net result one destabilization and welfare red uction. true even when all agents are rational, risk-averse c ompetitors who best possible use their available informat ion. Copyright 1987 by University Chicago Press.