A Model of Biased Intermediation

Alexandre Cornière (de) and Greg Taylor

No 17-753, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: This paper studies situations in which some consumers rely on a potentially biased intermediary to choose among downstream firms. We introduce the notion that firms' and consumers' payoffs can be congruent or conflicting, and show that this has important implications for the effects of bias. Under congruence, the firm towards which the intermediary is biased invests more than its rival and consumers can be better-off than under no bias. Under conflict, bias hurts consumers and the favored firm charges higher prices. We study various oft-proposed policies for dealing with a biased intermediary and show that the efficacy of each intervention depends strongly on whether the environment exhibits congruence or conflict. We discuss how the model relates to recent issues in online markets.

Keywords: intermediary; bias; regulation (search for similar items in EconPapers)
JEL-codes: D21 L15 L40 (search for similar items in EconPapers)
Date: 2017-01, Revised 2019-07
New Economics Papers: this item is included in nep-com, nep-mic and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (56)

Downloads: (external link)
https://www.tse-fr.eu/sites/default/files/TSE/docu ... /2017/wp_tse_753.pdf Full text (application/pdf)

Related works:
Journal Article: A model of biased intermediation (2019)
Working Paper: A Model of Biased Intermediation (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:31324

Access Statistics for this paper

More papers in TSE Working Papers from Toulouse School of Economics (TSE) Contact information at EDIRC.
Bibliographic data for series maintained by ().