ABSTRACT Policymakers in emerging markets are increasingly concerned about the consequences for the domestic equity market when companies list stock abroad. We show that the effects of cross‐listing depend on the quality of intermarket information linkages. We investigate these issues with unique data from the Mexican equity market. The impact of cross‐listing is complex—balancing the costs of order flow migration against the benefits of increased intermarket competition. These effects are exacerbated by equity investment barriers that induce segmentation of the domestic equity market. Consequently, the benefits and costs of cross‐listing are not evenly spread over all classes of shareholders.

We examine the relationship between stock prices and market segmentation induced by ownership restrictions in Mexico. The focus is on multiple classes of equity that differentiate between foreign and domestic traders, and between domestic individuals and institutions. Significant stock price premia are documented for shares not restricted to a particular investor group. We analyze the theoretical and empirical determinants of premia across firms and over time. In addition to economy-wide factors, segmentation reflects the relative scarcity of unrestricted shares. The results provide additional support for Stulz and Wasserfallen's (1995) hypothesis that firms discriminate between investor groups with different demand elasticities.

ABSTRACT We examine the relationship between stock prices and market segmentation induced by ownership restrictions in Mexico. The focus is on multiple classes of equity that differentiate between foreign and domestic traders, and between domestic individuals and institutions. Significant stock price premia are documented for shares not restricted to a particular investor group. We analyze the theoretical and empirical determinants of premia across firms and over time. In addition to economy‐wide factors, segmentation reflects the relative scarcity of unrestricted shares. The results provide additional support for Stulz and Wasserfallen's (1995) hypothesis that firms discriminate between investor groups with different demand elasticities.

The authors reply to the comment by D. R. Kamerschen and J. Park on their 1988 paper published in this Review. They find that the econometric point raised by these authors is flawed, because differences in model structure and data are ignored. In particular, the importance of materials input in assessing price-cost margins is reiterated here and illustrated with the 1988 paper's original table. Other points of the comment are refuted by direct reference to statistical results and inferred conclusions in the 1988 paper. Copyright 1993 by MIT Press.

The relevance of imperfect competition for models of aggregate economic fluctuations has received increased attention from researchers in both macroeconomics and industrial organization.Measuring properly the size of industry markups of price over marginal cost is important both for assessing the role of market structure and for determining the extent to which excess capacity is a significant feature accompanying imperfect competition in American industry.Using a panel data set on four-digit Census manufacturing industries, this paper expand8 recent work by Robert Hall on the importance of market structure for understanding cyclical fluctuations.We outline a methodology for estimating industry markups of price over cost and the influence of market structure on cyclical movements in total factor productivity.While we find evidence to support the proposition that price exceeds marginal cost In U.S. manufacturing, our results offer only limited support for the notion that markups are importantly related to differences in Industry concentration, though the effect of unionization is important.Concentration effects are important only in industries producing durable goods or differentiated con8umer goods.In addition, much of the estimated markup of price over marginal cost is accounted for by fixed costs related to overhead labor, advertising, and central office expenses; we do not find compelling evidence of substantial evidence of excess capacity in most industries.