Yeah, we're getting ever closer to the era in which:
- you step out to home depot to buy a $20 hammer
- when you get there "The Flash" (of dc comics fame) figures out you're looking to buy a hammer and buys all the $20 hammers
- he leaves a post-it note saying "if you want a hammer meet me in aisle 7"
- you get there and he offers to sell you a $20 hammer for $21
- either you buy it or you don't; once you've made your decision he returns either (N-1) or (N) hammers back to the store (30 day return policy and all that)
- if you head over to lowe's instead well he is "The Flash"
Not an exact metaphor for "flash trading" (as sketched it's riskless) but it's imho a relevant thought experiment.
At the individual level the winners and losers are pretty obvious. At the systemic level it's unclear any actual efficiency is gained; differentiating between actual "efficiency gains" and "red queen" scenarios is tricky.
- you step out to home depot to buy a $20 hammer
- when you get there "The Flash" (of dc comics fame) figures out you're looking to buy a hammer and buys all the $20 hammers
- he leaves a post-it note saying "if you want a hammer meet me in aisle 7"
- you get there and he offers to sell you a $20 hammer for $21
- either you buy it or you don't; once you've made your decision he returns either (N-1) or (N) hammers back to the store (30 day return policy and all that)
- if you head over to lowe's instead well he is "The Flash"
Not an exact metaphor for "flash trading" (as sketched it's riskless) but it's imho a relevant thought experiment.
At the individual level the winners and losers are pretty obvious. At the systemic level it's unclear any actual efficiency is gained; differentiating between actual "efficiency gains" and "red queen" scenarios is tricky.