Stock Exchange Competition and the Nasdaq Bargain in Europe

Abstract

Small capitalization markets like the US Nasdaq have proliferated in Europe in recent years as part of a broad but uneven process of financial reforms. Though often seen as a fairly direct response to financial globalization and market forces, they are, in fact, the product of supranational entrepreneurship and intra-European national rivalries. Nationally-based stock markets suddenly created small-cap markets not because of widely-perceived market pressures, but in response to moves by the European Commission that threatened to replace national markets with European ones.