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Revisiting the Rubinstein-Wolinsky model of middlemen

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Listed:
  • Gong, Grace Xun
  • Qiao, Ziqi
  • Wright, Randall

Abstract

Rubinstein and Wolinsky’s classic “Middlemen” paper introduced search theoretic models of intermediation. While this inspired much research, existing analysis of the model is incomplete. Rubinstein and Wolinsky show in equilibrium middlemen intermediate (buy from sellers and sell to buyers) when the rate at which they meet buyers exceeds the rate at which sellers meet buyers – but these rates should be endogenous. We characterize equilibrium in terms of fundamentals, not endogenous variables, providing novel existence, uniqueness and comparative static results. Also, being explicit about meeting technologies shows middlemen may intermediate even if their meeting technology is fundamentally inferior to sellers’ technology.

Suggested Citation

  • Gong, Grace Xun & Qiao, Ziqi & Wright, Randall, 2025. "Revisiting the Rubinstein-Wolinsky model of middlemen," Journal of Economic Behavior & Organization, Elsevier, vol. 240(C).
    • Handle: RePEc:eee:jeborg:v:240:y:2025:i:c:s0167268125004627
    DOI: 10.1016/j.jebo.2025.107345
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    References listed on IDEAS

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    1. Nosal, Ed & Wong, Yuet-Yee & Wright, Randall, 2019. "Intermediation in markets for goods and markets for assets," Journal of Economic Theory, Elsevier, vol. 183(C), pages 876-906.
    2. James Albrecht & Susan Vroman, 2002. "A Matching Model with Endogenous Skill Requirements," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 283-305, February.
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    5. Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-954, August.
    6. Xun (Grace) Gong & Ziqi Qiao & Randall Wright, 2025. "Middlemen in Search Equilibrium: A Survey," NBER Working Papers 34477, National Bureau of Economic Research, Inc.
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    Keywords

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    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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