The incentive to sell financial market information

Research output: Contribution to journalArticlepeer-review

27 Scopus citations


Investment advisory firms and brokerage firms hire analysts to uncover profitable securities investment opportunities. Then these firms sell the information (either directly or indirectly) to others. Why? Given that the information has value, why do these firms not keep the information to themselves and trade solely for their own accounts? Because of competition, information is more valuable when fewer people trade on the information. This paper shows that selling information is a strategic response by competing informed traders. Specifically, it is a means for informed traders to commit to trade aggressively, thereby inducing other informed traders to trade less aggressively. Journal of Economic Literature Classification Numbers: G10, D82.

Original languageEnglish (US)
Pages (from-to)95-115
Number of pages21
JournalJournal of Financial Intermediation
Issue number2
StatePublished - 1995

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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