Exclusive nightclubs and lonely hearts columns: Non-monotone participation in optional intermediation
In 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.
If 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.
Volume (Year): 84 (2012)
Issue (Month): 2 ()
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/jebo|
References listed on IDEAS
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.
- 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.
- Ettore Damiano & Hao Li, 2004. "Unraveling of Dynamic Sorting," 2004 Meeting Papers 174, Society for Economic Dynamics.
- Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-846, July-Aug..
- Alos-Ferrer, Carlos, 1999.
"Dynamical Systems with a Continuum of Randomly Matched Agents,"
Journal of Economic Theory,
Elsevier, vol. 86(2), pages 245-267, June.
- Alos-Ferrer, C., 1998. "Dynamic Systems with a Continuum of Randomly Matched Agents," Papers 9801, Washington St. Louis - School of Business and Political Economy.
- Carlos Alós-Ferrer, 1998. "- Dynamical Systems With A Continuum Of Randomly Matched Agents," Working Papers. Serie AD 1998-08, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Shimer, R. & Smith, L., 1997.
"Assortative Matching and Search,"
97-2a, Massachusetts Institute of Technology (MIT), Department of Economics.
- Ettore Damiano & Hao Li, 2007.
"Price discrimination and efficient matching,"
Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(2), pages 243-263, February.
- Jean-Charles Rochet & Jean Triole, 2002.
"Platform Competition in Two Sided Markets,"
FMG Discussion Papers
dp409, Financial Markets Group.
- Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, 06.
- Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10, pages -.
- Jean-Charles Rochet & Jean Triole, 2002. "Platform competition in two sided markets," LSE Research Online Documents on Economics 24929, London School of Economics and Political Science, LSE Library.
- Rochet, Jean-Charles & Tirole, Jean, 2003. "Platform Competition in Two-Sided Markets," IDEI Working Papers 152, Institut d'Économie Industrielle (IDEI), Toulouse.
- Ludovic Renou, 2011.
"Group Formation and Governance,"
Journal of Public Economic Theory,
Association for Public Economic Theory, vol. 13(4), pages 595-630, 08.
- Ludovic Renou, 2007. "Group formation and governance," Discussion Papers in Economics 07/07, Department of Economics, University of Leicester.
- Ludovic Renou, 2008. "Group formation and governance," Discussion Papers in Economics 08/15, Department of Economics, University of Leicester, revised Nov 2008.
- Gehrig, Thomas, 1993.
"Intermediation in Search Markets,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 2(1), pages 97-120, Spring.
- 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.
- Bloch, Francis & Ryder, Harl, 2000.
"Two-Sided Search, Marriages, and Matchmakers,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 93-115, February.
- Ettore Damiano & Hao Li & Wing Suen, 2005.
"Unravelling of Dynamic Sorting,"
Review of Economic Studies,
Oxford University Press, vol. 72(4), pages 1057-1076.
- 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 443-467, August.
- 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.
- Nadia Burani, 2008. "Matching, search and intermediation with two-sided heterogeneity," Review of Economic Design, Springer;Society for Economic Design, vol. 12(2), pages 75-117, June.
- 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.
- Fingleton, John, 1997. "Competition among Middlemen When Buyers and Sellers Can Trade Directly," Journal of Industrial Economics, Wiley Blackwell, vol. 45(4), pages 405-427, December.
- Gabre-Madhin, Eleni Z., 2001. "The role of intermediaries in enhancing market efficiency in the Ethiopian grain market," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 25(2-3), pages -, September.
- Hoppe, Heidrun C. & Moldovanu, Benny & Ozdenoren, Emre, 2007. "Coarse Matching and Price Discrimination," CEPR Discussion Papers 6041, C.E.P.R. Discussion Papers.
- Mark Armstrong, 2005.
"Competition in Two-Sided Markets,"
- Gunter J. Hitsch & Ali Hortaçsu & Dan Ariely, 2010. "Matching and Sorting in Online Dating," American Economic Review, American Economic Association, vol. 100(1), pages 130-163, March.
- 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.
- Yavas, Abdullah, 1994. "Middlemen in Bilateral Search Markets," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 406-429, July.
- R. Preston McAfee, 2002. "Coarse Matching," Econometrica, Econometric Society, vol. 70(5), pages 2025-2034, September.
- Ettore Damiano & Li Hao, 2008.
Journal of the European Economic Association,
MIT Press, vol. 6(4), pages 789-818, 06.
- Lones Smith, 2006. "The Marriage Model with Search Frictions," Journal of Political Economy, University of Chicago Press, vol. 114(6), pages 1124-1146, December.
- Caillaud, Bernard & Jullien, Bruno, 2003. " Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-328, Summer.
- 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 607-607, December.
- 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 169-181, September.
- Terrence Hendershott & Jie Zhang, 2006. "A Model of Direct and Intermediated Sales," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 279-316, 06.
When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:84:y:2012:i:2:p:618-632. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
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.