Exclusive nightclubs and lonely hearts columns: Non-monotone participation in optional intermediation
AbstractIn many decentralised markets, the traders who benefit most from an exchange do not employ intermediaries even though they could easily afford them. At the same time, employing intermediaries is not worthwhile for traders who benefit little from trade. Together, these decisions amount to non-monotone participation choices in intermediation: only traders of middle “type” employ intermediaries, while the rest, the high and the low types, prefer to search for a trading partner directly. We provide a theoretical foundation for this, hitherto unexplained, phenomenon. We build a dynamic matching model, where a trader's equilibrium bargaining share is a convex increasing function of her type. We also show that this is indeed a necessary condition for the existence of non-monotone equilibria.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Behavior & Organization.
Volume (Year): 84 (2012)
Issue (Month): 2 ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/jebo
Two-sided markets; Intermediation; Dynamic matching;
Other versions of this item:
- De Fraja, Gianni & Sákovics, József, 2010. "Exclusive Nightclubs and Lonely Hearts Columns: Non-monotone Participation in Optional Intermediation," CEPR Discussion Papers 8059, C.E.P.R. Discussion Papers.
- Gianni De Fraja & Jozsef Sakovics, 2010. "Exclusive Nightclubs and Lonely Hearts Columns: Non-monotone Participation in Optional Intermediation," ESE Discussion Papers 196, Edinburgh School of Economics, University of Edinburgh.
- De Fraja, Gianni & Sákovics, József, 2010. "Exclusive Nightclubs and Lonely Hearts Columns: Nonmonotone Participation in Optional Intermediation," SIRE Discussion Papers 2010-84, Scottish Institute for Research in Economics (SIRE).
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ettore Damiano & Hao Li, 2004.
"Unraveling of Dynamic Sorting,"
Econometric Society 2004 Latin American Meetings
72, Econometric Society.
- Ettore Damiano & Hao Li, 2004. "Unraveling of Dynamic Sorting," 2004 Meeting Papers 174, Society for Economic Dynamics.
- Damiano, Ettore & Li, Hao & Suen, Wing, 2004. "Unraveling of Dynamic Sorting," Microeconomics.ca working papers damiano-04-08-11-03-02-02, Vancouver School of Economics, revised 11 Aug 2004.
- Ludovic Renou, 2007.
"Group formation and governance,"
Discussion Papers in Economics
07/07, Department of Economics, University of Leicester.
- Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-46, July-Aug..
- Caillaud, Bernard & Jullien, Bruno, 2003. " Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-28, Summer.
- Damiano, Ettore & Li, Hao, 2005.
"Price Discrimination and Efficient Matching,"
Microeconomics.ca working papers
damiano-05-03-21-12-21-58, Vancouver School of Economics, revised 22 Mar 2005.
- Rochet, Jean-Charles & Tirole, Jean, 2003.
"Platform Competition in Two-Sided Markets,"
IDEI Working Papers
152, Institut d'Économie Industrielle (IDEI), Toulouse.
- Fingleton, John, 1997. "Competition among Middlemen When Buyers and Sellers Can Trade Directly," Journal of Industrial Economics, Wiley Blackwell, vol. 45(4), pages 405-27, December.
- Robert Shimer & Lones Smith, 2000.
"Assortative Matching and Search,"
Econometric Society, vol. 68(2), pages 343-370, March.
- Shimer, R. & Smith, L., 1998. "Assortive Matching and Search," Papers 98-09, Michigan - Center for Research on Economic & Social Theory.
- Shimer, R. & Smith, L., 1997. "Assortative Matching and Search," Working papers 97-2b, Massachusetts Institute of Technology (MIT), Department of Economics.
- Shimer, R. & Smith, L., 1997. "Assortative Matching and Search," Working papers 97-2a, Massachusetts Institute of Technology (MIT), Department of Economics.
- Damiano, Ettore & Li, Hao, 2005.
Microeconomics.ca working papers
damiano-05-01-25-10-08-07, Vancouver School of Economics, revised 18 Oct 2005.
- Zumpano, Leonard V & Elder, Harold W & Baryla, Edward A, 1996. "Buying a House and the Decision to Use a Real Estate Broker," The Journal of Real Estate Finance and Economics, Springer, vol. 13(2), pages 169-81, September.
- BLOCH, Francis & RYDER, Harl, 1994.
"Two-Sided Search, Marriages and Matchmakers,"
CORE Discussion Papers
1994028, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Eugene Choo & Aloysius Siow, 2006. "Who Marries Whom and Why," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 175-201, February.
- R. Preston McAfee, 2002. "Coarse Matching," Econometrica, Econometric Society, vol. 70(5), pages 2025-2034, September.
- Ettore Damiano & Hao Li & Wing Suen, 2005.
"Unravelling of Dynamic Sorting,"
Review of Economic Studies,
Oxford University Press, vol. 72(4), pages 1057-1076.
- Thomas Gehrig, 1993.
"Intermediation in Search Markets,"
1058, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Hoppe, Heidrun C. & Moldovanu, Benny & Ozdenoren, Emre, 2007. "Coarse Matching and Price Discrimination," CEPR Discussion Papers 6041, C.E.P.R. Discussion Papers.
- Gabre-Madhin, Eleni Z., 2001. "The role of intermediaries in enhancing market efficiency in the Ethiopian grain market," Agricultural Economics, Blackwell, vol. 25(2-3), pages 311-320, September.
- Clerides, Sofronis & Nearchou, Paris & Pashardes, Panos, 2008. "Intermediaries as quality assessors: Tour operators in the travel industry," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 372-392, January.
- Yavas, Abdullah, 1994. "Middlemen in Bilateral Search Markets," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 406-29, July.
- Nadia Burani, 2008. "Matching, search and intermediation with two-sided heterogeneity," Review of Economic Design, Springer, vol. 12(2), pages 75-117, June.
- Paul Gregg & Jonathan Wadsworth, .
"How effective are state employment agencies? Job centre use and job matching in Britain,"
NIESR Discussion Papers
69, National Institute of Economic and Social Research.
- Gregg, Paul & Wadsworth, Jonathan, 1996. "How Effective Are State Employment Agencies? Jobcentre Use and Job Matching in Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(3), pages 443-67, August.
- Gunter J. Hitsch & Ali Horta�su & Dan Ariely, 2010. "Matching and Sorting in Online Dating," American Economic Review, American Economic Association, vol. 100(1), pages 130-63, March.
- Nick Feltovich & Richmond Harbaugh & Ted To, 2002. "Too Cool for School? Signalling and Countersignalling," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 630-649, Winter.
- Hui-wen Koo & Pei-yu Lo, 2004. "Sorting: The Function of Tea Middlemen in Taiwan during the Japanese Colonial Era," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(4), pages 607-, December.
- Lones Smith, 2006. "The Marriage Model with Search Frictions," Journal of Political Economy, University of Chicago Press, vol. 114(6), pages 1124-1146, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.