Middle Men: The Visible Market-Makers

Makoto Watanabe*

*Corresponding author for this work

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

Fingerprint Dive into the research topics of 'Middle Men: The Visible Market-Makers'. Together they form a unique fingerprint.

Cite this