Competition between Intermediated and Direct Trade and the Timing of Disintermediation

John Fingleton
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John Fingleton: Postal: Department of Economics, Trinity College, Dublin 2, Ireland

Economics Technical Papers from Trinity College Dublin, Economics Department

Abstract: This paper analyses competition between direct and intermediated trade. We show that a middleman's supply and demand depend on both his bid and ask prices if sellers and buyers have the alternative of trading directly. Multiplicity also prevails. Direct trade does not constrain the market power of a middleman unless it is frictionless. Our results suggest that the timing of disintermediation is likely to be sub-optimal and have implications, more generally, for the analysis many functional goods markets where there are parallel or alternative trade channels for the same good.

JEL-codes: C78 D49 O12 (search for similar items in EconPapers)
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:tcd:tcduet:965

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