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We study how short-term informational advantages can be monetized in a high-frequency setting, when large inventories are explicitly penalized. We find that if most of the additional information is revealed regardless of the high-frequency traders' actions, then fast inventory management allows...
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decreases output volatility relative to sales volatility, lower levels of inventories actually increases sales volatility …. Because these two effects offset each other, a change in inventory management does not change output volatility to any great …
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