US Banking Cartel?
Anybody read this article? Beautiful scatter-plot illustrating that average IPO fees for U.S. banks cluster around 7% while the european bank's fees have far more variability and are significantly lower.
In their analysis, the researchers concluded that even higher amounts of competition in europe relative to the U.S. couldn't explain away a majority of the difference in gross spread.
U.S issuers could have saved $1bn on average per year had they paid european fees.
So what are the reasons for this? For those of you who've spent time on both sides of the atlantic, any good explanations come to mind? Or are U.S. banks running a cartel as the article insinuates?
Interesting but generally known fact. Have only been working in European context and competition over here is certainly a lot more intensive vs. US where large corporates generally stick to a small set of BB firms as core advisors (at least that's what I hear whenever speaking to my US collegues about IPO fees). This analysis is for rather small IPOs with deal size between $25-100m. Has anyone seen a similar analysis for larger IPOs as well?
It's long been known that there's an unwritten rule on the Street about fees. Any bank who tried to unilaterally undercut the competition by lowering their fee structure to attract new business would be set upon by the other banks like a pack of wild dogs.
What he said^^^
So much for Wall Street being made up of folks who value competition and free markets. Lmao, what a joke.
Businesses hate free markets because free markets benefit consumers.
Therefor OP's question has been answered. It IS a cartel, only they don't fix shady meetings like the ADM execs and the Japanese in the shady meetings to fix lysine prices in the 90s. (The Informant)
So I went to 5 different places to look for milk and they were all within +- 20 cents. Another cartel? Same thing with practically everything else I buy. Not much variation.
The difference is those prices are dynamic and are a function of supply/demand, and not quiet collusion.
Isn't milk subject to an array of price controls/supports and subsidies? Doesn' the federal gov't enforce various regional milk cartels?
Haven't the free market solutions (crop insurance, futures markets, revenue insurance) atrophied as farmers seek redress from the gov't teet?
Ahh..so you think. Well, look at any fee based service. You'll see the same thing. It's all quite collusion.
Milton Freeman also talked about the government support drug cartels by keeping it illegal... I think hap posted an article about that.
Cool service, this part kind of sucks though...
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it's pretty normal in an oligopoly to get the same price across all firms, they chose to compete on factors other than price and may occasionally engage in a price war.
this does not necessarily imply collusion.
so much for the text book stuff :p
Dude..I pay the same price for porn across the board...that's collusion..friggin porn stars are out to rip us off.
Dude...this is 2011 who pays for porn?
I believe he is saying he pays $0 across the board...
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