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Natural Oligopoly in Intermediated Markets

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  • Thomas Gehrig

Abstract

) and convergence to a fragmented industrial structure does not obtain as the economy grows large. In particular, we find a natural oligopoly in which in general there are three larger intermediaries of similar size and one smaller intermediary occupying niche markets. Nevertheless, as the number of islands increases, spreads shrink to zero and almost competitive allocations arise.

Suggested Citation

  • Thomas Gehrig, 1993. "Natural Oligopoly in Intermediated Markets," Discussion Papers 1027, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    • Handle: RePEc:nwu:cmsems:1027
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    References listed on IDEAS

    as
    1. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(1), pages 3-13.
    2. Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(3), pages 393-414.
    3. Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, vol. 20(3), pages 340-359, June.
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    Cited by:

    1. Sugato Chakravarty & Asani Sarkar, 1997. "Traders' broker choice, market liquidity and market structure," Staff Reports 28, Federal Reserve Bank of New York.
    2. Ben Slimane, FATEN, 2007. "L'Evolution des Marchés Boursiers Européens: Enjeux et limites [European Stock Market Evolution]," MPRA Paper 2607, University Library of Munich, Germany.

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    More about this item

    Keywords

    intermediation; network competition; vertical product differentiation; industrual structure; natural oligopoly;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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