Middle Men: The Visible Market-Makers

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

This paper presents a framework in which middlemen emerge to intermediate between ex-ante homogeneous buyers and sellers in the presence of search frictions. Middlemen announce prices, and hold an inventory to provide more sure services. Middlemen can mitigate trade imbalances with price competition. Using this framework I illustrate how the frictionless limit can emerge and how middlemen can implement the short-side principle for the market price to be Walrasian. The recent progress in the literature on intermediation will also be discussed.

Original languageEnglish
Pages (from-to)156-170
Number of pages15
JournalJapanese Economic Review
Volume69
Issue number2
DOIs
Publication statusPublished - Jun 2018

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Market makers
Middlemen
Trade imbalances
Intermediation
Search frictions
Market price
Price competition
Seller
Buyers

Cite this

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Middle Men : The Visible Market-Makers. / Watanabe, Makoto.

In: Japanese Economic Review, Vol. 69, No. 2, 06.2018, p. 156-170.

Research output: Contribution to JournalArticleAcademicpeer-review

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