Inefficient market


Also found in: Dictionary, Thesaurus, Legal.
Related to Inefficient market: Strong Form Market Efficiency

Inefficient Market

A market where prices do not always reflect available information as accurately as possible. Inefficient markets may result from a lag in information transferring to one place to another, deliberate withholding of information by an insider, or other reasons. Inefficient markets give rise to arbitrage opportunities. Most analysts believe that no market is perfectly efficient and that some inefficiency is inevitable. See also: Efficient Markets Hypothesis.

Inefficient market.

In an inefficient market, investors may not have enough information about the securities in that market to make informed decisions about what to buy or the price to pay.

Markets in emerging nations may be inefficient, since securities laws may not require issuing companies to disclose relevant information. In addition, few analysts follow the securities being traded there.

Similarly, there can be inefficient markets for stocks in new companies, particularly for new companies in new industries that aren't widely analyzed.

An inefficient market is the opposite of an efficient one, where enormous amounts of information are available for investors who choose to use it.

Mentioned in ?
References in periodicals archive ?
Such schemes are more likely to have a significant effect on prices in inefficient markets and are unlikely to succeed in efficient markets.
Notice that the 50% of consumers in the inefficient market will not switch because the utility gain would be only $96 (per unit of mass), while the cost is assumed to be $124 (per unit of mass).
In more technically precise terms, analyzing comparable sales drawn from inefficient markets, where general linear relatedness and specific nonlinear variance occur, suggests the need for a statistic that avoids imposing linear assumptions on nonlinear and contradictory variances.
The MPT marketplace is basically efficient, but ETIs are bred of inefficient markets.
Having diagnosed the former Soviet Union as an inefficient market, donor agencies provided market infrastructure and regulations.
I especially enjoyed Jordan's insights into diversification, the inefficient market, and identifying stocks that are in their 'sweet spot.
The features of Life-Exchange are specifically designed to improve regulatory compliance, increase customer value, reduce transaction costs, create new revenue models, and add efficiency to an otherwise inefficient market.
Dr Nahan said that the split of Western Power by the Labor State Government in 2006 had resulted in significant cost increases through an inefficient market structure.
The result is an inefficient market with limited liquidity.
Dayak has the opportunity to do for the recruiting business what eBay did for physical goods - that is, make an inefficient market much more efficient.
Increased demand could transform the securities lending marketplace from an opaque, inefficient market, as the demand for better exchanges linked to a central counterparty will increase and the ongoing hunt for transparency will continue.
Intellectual property today is an inefficient market, and the Index presents a meaningful opportunity for investors," said Keith Cardoza, Managing Director of Ocean Tomo, and Chief Investment Officer of Ocean Tomo Asset Management.