Financial Markets

Sun 23 July 2017


8:45 Breakfast
11.00 Director’s Introduction and Academic Briefing
11:15 Stock Exchanges: The Perfect Market? (Kevin Sheppard)
12:15 Break, followed by Lunch at 12:30
1:15 Syndicate Discussion
2:15 Evaluating Investment Decisions: Assets and Option Values (Kevin Sheppard)
3:15 Syndicate Discussion
4:30 Ecological Risk  (Kevin Sheppard)
7.00 Curry and Croquet


Prices should reflect the relative costs and benefits of economic activity. Responding to prices, different economic actors (consumers, workers, managers, entrepreneurs, and so on) can be led to efficient outcomes. We have already seen that markets can fail when prices fail to incorporate spillovers. Prices can also be distorted when buyers and sellers exert significant market power, for instance, a monopolist can choose to restrict supply and drive prices and profits upwards. While this can be bad for overall efficiency, it can, of course, be good for those lucky enough to possess such market power. Today we begin by studying the exploitation of monopoly power. We also bring in the effects of increased competition and work out the relationship between competition and economic performance. The third lecture explores coordinated effects: when firms misuse their combined market power to raise prices. Needless to say excessive market power can be bad for firms as well as a concern for governments; after all, if your supplier is a monopolist then you may be held to ransom. We conclude the day with a lecture that highlights some issues in modern antitrust and competition law.

Kevin Sheppard – Syndicate Tutor

Kevin Sheppard – Syndicate Tutor
Kevin studied economics and mathematics at the Universities of Texas before obtaining his PhD in Economics at the University of California-San Diego. He specializes in measuring and modeling risk. His current research analyzes how risk evolves over time focusing substantially on asymmetric transfer across time. Other current projects include exploring how shocks in one market spread across the globe and how uncertainty about the future affects the amount of reward required to bear a risk. Kevin also researches theoretical issues in econometrics with a specialization in the tools needed to analyze financial market data.