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Middlemen in Bilateral Search Markets

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  • Yavas, Abdullah

Abstract

This article examines the role of middlemen in bilateral search markets (e.g., employment agencies, real estate brokers). It is shown that the middleman narrows the set of buyer (firm) and seller (worker) types who search; seller types with high valuations and buyer types with low valuations drop out of the search market and instead trade through the middleman. The middleman also decreases the equilibrium search intensities of those agents who search. It is proven that the middleman improves welfare if search is very costly and inefficient and decreases welfare if search is effectively costless and very efficient. Copyright 1994 by University of Chicago Press.

Suggested Citation

  • Yavas, Abdullah, 1994. "Middlemen in Bilateral Search Markets," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 406-429, July.
  • Handle: RePEc:ucp:jlabec:v:12:y:1994:i:3:p:406-29
    DOI: 10.1086/298350
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    References listed on IDEAS

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    1. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    2. Kalai, Ehud & Smorodinsky, Meir, 1975. "Other Solutions to Nash's Bargaining Problem," Econometrica, Econometric Society, vol. 43(3), pages 513-518, May.
    3. Sreedhar, 1975. "India-Pakistan Trade: Problems and Prospects," India Quarterly: A Journal of International Affairs, , vol. 31(3), pages 233-248, July.
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