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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.

Suggested Citation

  • Watanabe, Makoto, 2010. "A model of merchants," Journal of Economic Theory, Elsevier, vol. 145(5), pages 1865-1889, September.
  • Handle: RePEc:eee:jetheo:v:145:y:2010:i:5:p:1865-1889
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gautier, Pieter A. & Hu, Bo & Watanabe, Makoto, 2016. "Marketmaking Middlemen," IZA Discussion Papers 10152, Institute for the Study of Labor (IZA).
    2. Daniele Condorelli & Andrea Galeotti & Vasiliki Skreta, 2013. "Selling Through Referrals," Working Papers 13-06, New York University, Leonard N. Stern School of Business, Department of Economics.
    3. repec:eee:jetheo:v:174:y:2018:i:c:p:124-183 is not listed on IDEAS
    4. Godenhielm Mats & Kultti Klaus, 2015. "Directed Search with Endogenous Capacity," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 15(2), pages 211-249, July.
    5. Oksana Loginova & Andrea Mantovani, 2015. "Price Competition in the Presence of a Web Aggregator," Working Papers 1616, Department of Economics, University of Missouri, revised 17 Aug 2016.
    6. Leung, Charles Ka Yui & Tse, Chung-Yi, 2017. "Flipping the Housing Market," Globalization and Monetary Policy Institute Working Paper 301, Federal Reserve Bank of Dallas.
    7. 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.
    8. Christian Holzner & Makoto Watanabe, 2015. "Labor Market Equilibrium with Public Employment Agency," CESifo Working Paper Series 5245, CESifo Group Munich.
    9. Yuet-Yee Wong & Randall Wright, 2011. "Buyers, Sellers and Middlemen: Variations on Search-Theoretic Themes," 2011 Meeting Papers 374, Society for Economic Dynamics.
    10. Fernández-Blanco, Javier, 2012. "A directed search model of intermediated trade," European Economic Review, Elsevier, vol. 56(8), pages 1481-1494.
    11. Kuniavsky, Sergey, 2014. "Consumer Search with Chain Stores," Discussion Papers in Economics 20799, University of Munich, Department of Economics.
    12. Kuniavsky, Sergey, 2014. "Consumer Search With Chain Stores," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100468, Verein für Socialpolitik / German Economic Association.
    13. Moraga-Gonzalez, Jose L. & Wildenbeest, Matthijs R., 2011. "Comparison sites," IESE Research Papers D/933, IESE Business School.
      • 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.
    14. Nosal, Ed & Wong, Yuet-Yee & Wright, Randall, 2014. "More on Middlemen: Equilibrium Entry and Efficiency in Intermediated Markets," Working Paper Series WP-2014-18, Federal Reserve Bank of Chicago.
    15. Geromichalos, Athanasios, 2012. "Directed search and optimal production," Journal of Economic Theory, Elsevier, vol. 147(6), pages 2303-2331.
    16. 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.
    17. Yuet-Yee Wong & Randall Wright, 2011. "Buyers, sellers and middlemen: variations in search theory," Working Papers 691, Federal Reserve Bank of Minneapolis.
    18. 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.

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