Scandinavian Working Papers in Business Administration
Finance Research Group Working Papers,
University of Aarhus, Aarhus School of Business, Department of Business Studies
No F-2006-97: Dispersed Trading and the Prevention of Market Failure: The Case of the Copenhagen Stock Exchange
David C. Porter (), Carsten Tanggaard (), Daniel G. Weaver () and Wei Yu ()
Additional contact information
David C. Porter: College of Business and Economics, Postal: Department of Finance and Business Law, University of Wisconsin-Whitewater, Whitewater, WI 53190,
Carsten Tanggaard: Department of Business Studies, Aarhus School of Business, Postal: The Aarhus School of Business, Fuglesangs Allé 4, 8210 Aarhus V, Denmark
Daniel G. Weaver: Department of Finance, Postal: Rutgers Business School, Rutgers University, 94 Rockafeller Road, Priscataway, NJ 08854-8054
Wei Yu: Department of Finance, Postal: Rutgers Business School, Rutgers University, 94 Rockafeller Road, Priscataway, NJ 08854-8054
Abstract: With augmented demands on power grids resulting in longer and larger blackouts
combined with heightened concerns of terrorist attacks, trading institutions and policy
makers have widened their search for systems that avoid market failure during these
disturbing events. We provide insight into this issue by examining trading behavior at the
Copenhagen Stock Exchange during a major blackout. We find that although market
quality declined, markets remained functional and some price discovery occurred during
the blackout period suggesting that the NOREX structure of interlinked trading systems
combined with widely dispersed trading locations may be a viable means of protection
against market failure during massive power disruptions or terrorist attacks.
Keywords: Power failure; Fragmented markets; Market failure
43 pages, January 4, 2006
Full text files
F_2006_07.pdf
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