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Thin Markets

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The New Palgrave Dictionary of Economics

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Abstract

A thin market is a market with few buying or selling offers. The concept of market thinness, while general, is typically used in the context of financial markets. When the number of buying or selling offers is small, investors’ trading positions are large relative to market size. Trading then requires price concessions and thus exerts an impact on prices. A thin market is characterized by low trading volume, high volatility and high bid–ask spreads. This article discusses the modelling of thin markets, some typical phenomena of such markets, and their implications for market design.

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Authors and Affiliations

  1. http://link.springer.com/referencework/10.1007/978-1-349-95121-5

    Marzena Rostek & Marek Weretka

Authors
  1. Marzena Rostek
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  2. Marek Weretka
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Rostek, M., Weretka, M. (2018). Thin Markets. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2174

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