Standard Securities

Douglas Gale

    Research output: Contribution to journalArticlepeer-review


    The cost of gathering information about unfamiliar securities may lead to gains from standardization; firms issue a particular security because it is used by other firms. To support standardization as an equilibrium phenomenon, information must be non-transferable (otherwise it might be revealed by prices or the observation of other agents’ decisions) and it must be generic (useful in evaluating a number of securities). A competitive equilibrium in which standard contracts are used may be subject to coordination failure: while there always exists a constrained efficient equilibrium, there may also exist Pareto-ranked equilibria.

    Original languageEnglish (US)
    Pages (from-to)731-755
    Number of pages25
    JournalReview of Economic Studies
    Issue number4
    StatePublished - Sep 1992

    ASJC Scopus subject areas

    • Economics and Econometrics


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