The Nature of Securities Transactions and Market Control

This chapter examines how corporations though both fraudulent and nonfraudulent actions can be understood as mechanisms for controlling market transactions. Corporations use their resources to control the competitiveness of the market in which they do business in multiple ways. It examines eight mechanisms: unequal access to information, elimination of competition through diversification, vertical integration and vertical disintegration, predatory pricing, political influences, control over uncertainty of the client&s;s environment, control over techniques that manipulate the market, and purchase of employee loyalty. In spite of all the complexities of modern securities transactions and their invisible nature, these transactions are based upon a considerable amount of trust. Competition and cooperation are concepts that assist us in differentiating between ideal markets and corporations. The point has been made that the high-yield bond market did not operate at the high level of efficiency it would have under some natural equilibrium process with open access to information and free-market mechanisms based on competition.