Abstract
This article develops a model in which market structure is determined endogenously by the choice of intermediation mode. There are two representative modes of intermediation that are widely used in real-life markets: one is a middleman mode where an intermediary purchases inventory from the wholesale market and resells to buyers; the other is a market-making mode where an intermediary offers a platform for buyers and sellers to meet and trade. We show that a marketmaking middleman, who adopts a mixture of these two intermediation modes, can emerge in a directed search equilibrium and discuss implications for the market structure.
| Original language | English |
|---|---|
| Pages (from-to) | 83-103 |
| Number of pages | 21 |
| Journal | Rand Journal of Economics |
| Volume | 54 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - Mar 2023 |
Bibliographical note
Funding Information:Open access publishing facilitated by the Vrije Universiteit Amsterdam, as part of the Wiley - Vrije Universiteit Amsterdam agreement.
Publisher Copyright:
© 2023 The Authors. The RAND Journal of Economics published by Wiley Periodicals LLC on behalf of The RAND Corporation.
Funding
Open access publishing facilitated by the Vrije Universiteit Amsterdam, as part of the Wiley - Vrije Universiteit Amsterdam agreement.
| Funders | Funder number |
|---|---|
| Japan Society for the Promotion of Science | 22K20161 |