Competition among Middlemen When Buyers and Sellers can Trade Directly

John Fingleton

No 1538, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper examines how the introduction of a direct trade alternative for buyers and sellers affects competition among middlemen. Direct trade makes middlemen’s supply and demand functions depend on both bid and ask prices, a feature we term interdependence. A simple model is used to illustrate this phenomenon and to show how interdependence effects depend on the efficiency of direct trade. We find that direct trade does not alter Stahl’s (1988) finding that middlemen may ‘corner’ the market. This occurs under different conditions and with smaller distortions if there is an active direct trade possibility for sellers and buyers, however.

Keywords: Intermediation; Middleman; Monopolization (search for similar items in EconPapers)
JEL-codes: D4 G2 L1 (search for similar items in EconPapers)
Date: 1996-12
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=1538 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
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:cpr:ceprdp:1538

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=1538

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().