Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/147513 
Authors: 
Year of Publication: 
2016
Series/Report no.: 
QUCEH Working Paper Series No. 2016-05
Publisher: 
Queen's University Centre for Economic History (QUCEH), Belfast
Abstract: 
Can limits to arbitrage explain historical asset price reversals? During the "British Bicycle Mania" of 1896-1898, cycle share prices rose by 200 per cent before falling 76 per cent from their peak value. This paper argues that arbitrage during this episode was limited by the risk of being cornered after short selling shares. Three corners in cycle company shares occurred during the "mania", two of which resulted in substantial losses for short-sellers. The first corner corresponded with a structural break in cycle share prices, and crosssectional analysis reveals that companies for which cornering risk was greater experienced more pronounced mispricing.
Subjects: 
market corner
short selling
bicycle mania
JEL: 
G19
N23
Document Type: 
Working Paper

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