Book Reviews

• Date: 01 December 1973
• DOI: 10.1177/0003603X7301800416
• Published date: 01 December 1973
• Author: James L. Bicksler
• Subject Matter: Book Reviews

BOOK

REVIEWS

895

Richard R. West and Seha M. Tinic, The Economics of the

Stock Market, New York:

Praeger

(1971), 222 pp., $10.

The Economics

of

the Stock Market by West-Tinic is not

the usual quest

for

riches primer complete with magical

investment advice. ,Instead,

it

focuses on an

array

of issues

germane to the economics of the exchange (secondary market

for equity securities) industry.

For

aplurality of reasons,

these queries are of much current

interest

on the

Street

inasmuch as a variety of policy questions loom at the fore-

front of the evolving structure of the exchange community.

The major thesis, though implicitly stated, of W-T is

that

neither individually

nor

collectively do U. S. shareholders

maximize the utility of current consumption and end-of-period

wealth because of the effective "conniving" activities of the

NY.SE. The "documentation" of these "conniving" activities

along with the development of the

appropriate

frameworks

for economic reasoning constitutes the

major

portion of W-T.

Indeed, The Economics

of

the Stock Market can in many

ways be viewed as a self-contained instructional guide to

issues of the exchange community. The core of the discussion,

however, definitely does focus on the implied argument of

non-optimal shareholder wealth

and

welfare conditions re-

sulting from the continuous auction market cum exchange

specialists.

The structure of the book proceeds from adiscussion of

broadly based economic frameworks to narrower empirical

and policy issues of the exchange community, Thus, W-T

begin by observing

that

traditional models of price theory

(e.g,

pure

monopoly and competition) provide few positive

insights into the price formation of security transactions a

la the portfolio-equilibrium adjustment process.

Further,

simulation models

are

sufficiently robust

that

they can gen-

erate, for example, price changes resulting from the difficulty

of matching orders without resort to fundamental changes

in supply-demand conditions. Extensions incorporating