Please review the article by Christie and Schulz "Did Nasdaq Market Makers Implicitly Collude?" available at https://www.aeaweb.org/articlesid=10.1257/jep.9.3.199 (15 marks)

a.

Why is it surprising that it appears that collusion was sustained in this market? (Explain in 100 words or less)

b.

The authors quote a manager who comments that the reason for the spreads is probably tradition. Is that explanation plausible? Explain in 100 words or less

.

c.

What punishment could market makers use to sustain collusion? (Explain in 100 words or less)