Information Externalities and Intermediaries in Frictional Search Markets

Xianwen Shi and Aloysius Siow

Working Papers from University of Toronto, Department of Economics

Abstract: In frictional matching markets with heterogeneous buyers and sellers, sellers incur discrete showing costs to show goods to buyers who incur discrete inspection costs to assess the suitability of the goods on offer. We study how brokers can help reduce these costs by managing the level and mix of goods in their inventory. Intermediaries emerge and improve social welfare when there is sufficient heterogeneity in the types of goods and preferences. Learning and inventory management enable search intermediaries to internalize information externalities generated in unintermediated private search.

Keywords: Search; Intermediation; Brokers; Housing Markets (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Pages: Unknown pages
Date: 2013-09-10
New Economics Papers: this item is included in nep-mic and nep-ure
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https://www.economics.utoronto.ca/public/workingPapers/tecipa-496.pdf Main Text (application/pdf)

Related works:
Journal Article: Information externalities and intermediaries in frictional search markets (2014)
Journal Article: Information externalities and intermediaries in frictional search markets (2014)
Working Paper: Information Externalities and Intermediaries in Frictional Search Markets (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:tor:tecipa:tecipa-496

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