The authors study trade between a buyer and a seller when both may have existing inventories of assets similar to those … being traded. They analyze how these inventories affect trade, information dissemination, and price formation. The authors … show that when the buyer's and seller's initial leverage is moderate, inventories increase price and trade volume, but when …

have existing inventories of assets similar to those being traded. We show that these inventories may lead to prices that … prevent a competitor from purchasing at a lower price and releasing bad news about inventory values. Inventories also prevent …

We study trade between an informed seller and an uninformed buyer who have existing inventories of assets similar to … those being traded. We show that these inventories could induce the buyer to increase the price (a run-up) but could also … inventories. In a dynamic extension, we show that a market freeze could be preceded by high prices. Finally, we discuss empirical …

inventories of assets similar to those being traded. We analyze how these inventories affect trade, information dissemination, and … prices. We show that when traders’ initial leverages are moderate, inventories increase price and trade volume (a market “run …