Venture Investing in Science by Douglas Jamison

Author:Douglas Jamison
Language: eng
Format: epub
Tags: BUS036000, Business & Economics/Investments & Securities/General, SCI003000, Science/Applied Sciences
Publisher: Columbia University Press
Published: 2017-05-30T04:00:00+00:00

Generally speaking, economists and regulators have maintained that competition and reduced transaction costs are of great benefit to consumers. This is only true to a point. When it comes to investments, higher front-end or transaction costs and tax structures that penalize speculative (short-term) behavior can act as disincentives to speculative behavior and create incentives for investment (buy-and-hold) behavior that may be essential to avoiding boom-and-bust cycles and maintaining the infrastructure necessary to support a healthy investment culture. As markets become frictionless (i.e., when there is little cost to entering into a transaction), it becomes easier for massive numbers of investors to engage in speculative activity. This occurred first with the introduction of $25 per trade online brokerage commissions in 1996 (which later dropped to below $10 per trade) and decimalization in 2001. Consumers flocked to the markets.8

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