Market Manipulation, Bubbles, Corners, and Short Squeezes

TLDR

A large trader is any investor whose trades change prices, and a market manipulation strategy generates positive real wealth with no risk. This paper investigates market manipulation trading strategies by large traders in a securities market. Market manipulation trading strategies are shown to exist under reasonable hypotheses on the equilibrium price process, and sufficient conditions for their nonexistence are also provided.

Abstract

This paper investigates market manipulation trading strategies by large traders in a securities market. A large trader is defined as any investor whose trades change prices. A market manipulation trading strategy is one that generates positive real wealth with no risk. Market manipulation trading strategies are shown to exist under reasonable hypotheses on the equilibrium price process. Sufficient conditions for their nonexistence are also provided.