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A model of merchants

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  • Watanabe, Makoto

Abstract

I propose a simple model of merchants who are specialized in buying and selling a homogeneous good. Facing the same frictions as in the buyer-seller direct trades, merchants can make profits with an ability to buy and sell many units of the good. They set the price to compete in the market and provide buyers with a strong likelihood of obtaining the good. This paper establishes a turnover equilibrium where some agents choose to become merchants endogenously. An interesting multiplicity can emerge.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 145 (2010)
Issue (Month): 5 (September)
Pages: 1865-1889

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Handle: RePEc:eee:jetheo:v:145:y:2010:i:5:p:1865-1889

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Web page: http://www.elsevier.com/locate/inca/622869

Related research

Keywords: Retail trades Specialization Turnover behaviors Directed search equilibrium;

References

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Citations

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Cited by:
  1. Athanasios Geromichalos, 2010. "Directed Search and Optimal Production," Working Papers 1016, University of California, Davis, Department of Economics.
  2. Yuet-Yee Wong & Randall Wright, 2011. "Buyers, Sellers and Middlemen: Variations on Search-Theoretic Themes," NBER Working Papers 17511, National Bureau of Economic Research, Inc.
  3. Yuet-Yee Wong & Randall Wright, 2011. "Buyers, sellers and middlemen: variations in search theory," Working Papers 691, Federal Reserve Bank of Minneapolis.
  4. Jose Luis Moraga-Gonzalez & Matthijs R. Wildenbeest, 2011. "Comparison Sites," Working Papers 2011-04, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  5. Fernández-Blanco, Javier, 2012. "A directed search model of intermediated trade," European Economic Review, Elsevier, vol. 56(8), pages 1481-1494.
  6. Yuet-Yee Wong & Randall Wright, 2011. "Buyers, Sellers and Middlemen: Variations on Search-Theoretic Themes," 2011 Meeting Papers 374, Society for Economic Dynamics.

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