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Intermediated Search

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  • Eric Smith

Abstract

If buyers cannot observe product characteristics, they search available sellers to find better matches. In this situation, market go-betweens who 'manage' a variety of products emerge, offering consumers a variety of trading opportunities which reduce the uncertainty of search and improve the quality of consumer-producer trades. The distribution of the benefits from this intermediation depend critically on the number of products available. When variety is low, increases in capacity heighten competition, thereby lowering prices. On the other hand, with many products on offer, retail firms act monopolistically. In this case, increased capacity raises prices. Copyright (c) The London School of Economics and Political Science 2004.

Suggested Citation

  • Eric Smith, 2004. "Intermediated Search," Economica, London School of Economics and Political Science, vol. 71(284), pages 619-636, November.
  • Handle: RePEc:bla:econom:v:71:y:2004:i:284:p:619-636
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    Cited by:

    1. Leung, Charles Ka Yui & Tse, Chung-Yi, 2017. "Flipping in the housing market," Journal of Economic Dynamics and Control, Elsevier, vol. 76(C), pages 232-263.
    2. Adrian Masters, 2007. "Middlemen In Search Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(1), pages 343-362, February.
    3. Watanabe, Makoto, 2010. "A model of merchants," Journal of Economic Theory, Elsevier, vol. 145(5), pages 1865-1889, September.
    4. Arya, Anil & Löffler, Clemens & Mittendorf, Brian & Pfeiffer, Thomas, 2015. "The middleman as a panacea for supply chain coordination problems," European Journal of Operational Research, Elsevier, vol. 240(2), pages 393-400.
    5. Watanabe Watanabe, Makoto, 2006. "Middlemen: the visible market makers," UC3M Working papers. Economics we061002, Universidad Carlos III de Madrid. Departamento de Economía.

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