Overview of the Book.
CHAPTER 1: Introduction to Market-Driven Economics.
Theory and Reality.
Primary and SecondaryMarkets.
Frictionless versus Nonfrictionless Markets.
How Well Do Markets Function?
A Market Is an Ecology.
Basic Microeconomic Concepts.
Frictionless Markets, the Gulf Stream, and a Day at the Races.
Questions to Think About.
TraderEx Simulation: Let’s Look at a Market.
CHAPTER 2: The Consumer Choice Model: What Would You Really Like to Do?
The Consumer Choice Model and the X,Y Trade-Off.
The Consumer Choice Model and the Current Consumption, Future Consumption Trade-Off.
The Consumer Choice Model and the Risk-Return Trade-Off.
Let’s Consider an Application: Philanthropy.
TraderEx Simulation: What Are Your Attitudes Toward Risk?
CHAPTER 3: Demand Meets Supply.
Should Have, Would Have, and Did: The Decisions of a Representative Consumer.
The Demand Curve for X.
The Sensitivity of the Demand for X to the Price of X, the Price of Y, and Income.
From Individual Demand Curves to Market Demand Curves.
The Demand to Hold Shares of a Risky Asset.
The Investor’s Demand Curve for the Risky Asset.
Equilibrium in the Market for X.
Equilibrium in the Market for Shares of the Risky Asset.
Stocks, Cakes, and Substitutability.
Let’s Consider an Application: Bandwagon and Snob Effects.
TraderEx Simulation: Call Market Trading.
CHAPTER 4: Microeconomic Analysis Goes to Market.
Short-Run Demand and Supply for Product X.
The Gains from Trading.
Strategic Order Placement.
The Big Picture.
Let’s Consider an Application: Why Bid-Ask Spreads Exist in Securities Markets.
TraderEx Simulation: What Are Your Attitudes Toward Trading Costs?
CHAPTER 5: Supply and the Costs of Production.
The Production Function for X.
Determining the Best Profit Output.
Application to a Dealer Firm.
From General Principles to the Details of a Specific Market.
Let’s Consider an Application: The Optimal Schooling Behavior of Fish.
TraderEx Simulation: What Is It Like to Be a Securities Dealer?
CHAPTER 6: Sources and Nature of Competition.
Imperfect Competition:Monopolistic Competition.
Imperfect Competition: Oligopoly.
How Competition Plays Out in the Equity Markets.
Importance of Price as a Competitive Variable.
Let’s Consider an Application: Why Firms Extend Trade Credit.
TraderEx Simulation: Intermarket Competition in the Exchange Space.
CHAPTER 7: Market Efficiency.
Information and Expectations.
Info about Information.
Four Dimensions of Informational Efficiency.
A Test of Market Efficiency.
Price Discovery Efficiency.
The Big Picture on Financial Market Efficiency.
Markets at Risk: The Financial Turmoil of 2007–2009.
The Greater Generality of the Frictions Problem.
Let's Consider an Application: How Are Equilibrium Prices Discovered in a Competitive Market?
TraderEx Simulation: Finding an Equilibrium Value.
CHAPTER 8: Public Policy and the Interplay between Competition, Technology, and Regulation.
Governance Structure and Self-Regulation.
Technology, Automation, and the NASDAQ Stock Market.
The Evolving Regulatory Focus.
Governmental Regulatory Intervention.
Regulation of the U.S. Equity Markets.
Caveats for Public Policy.
Questions to Think About.
TraderEx Simulation: Economic Effects of an Order Protection Rule.
About the Author.