Marketmaking Middlemen

Pieter Gautier, Bo Hu and Makoto Watanabe

RAND Journal of Economics, 2023, vol. 54, issue 1, 83-103

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.

Date: 2023
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Citations: View citations in EconPapers (3)

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https://doi.org/10.1111/1756-2171.12431

Related works:
Working Paper: Marketmaking Middlemen (2016)
Working Paper: Marketmaking Middlemen (2016)
Working Paper: Marketmaking Middlemen (2016)
Working Paper: Marketmaking Middlemen (2016)
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